When a headline about a potential broadcaster for your games draws a negative reaction, you’re not in a good place.
The Pac-12 is nearing dire straits right now. There’s no other way to put it. The New York Post’s report Tuesday that Apple TV+ is a potential landing spot for Pac-12 sports landed like a lead balloon among fans, and for understandable reasons.
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It doesn’t mean the league is about to fall apart or that it can’t still secure a good enough TV deal for the short-term future. It will probably be OK. But the Pac-12 may be the canary in the coal mine for college conferences outside what is becoming the Power 2 of the Big Ten and SEC.
Streaming won’t be the answer to saving college football as we know it. We know this because streaming isn’t saving TV.
The identity of the mystery third bidder has been revealed. https://t.co/dFjL50Kb3s
— Stewart Mandel (@slmandel) February 21, 2023
You can’t completely blame Pac-12 commissioner George Kliavkoff. He needs to find some other interested bidders to gain some sort of leverage in negotiations with ESPN after he inherited an incredibly difficult situation from former commissioner Larry Scott. Fox, a current Pac-12 media partner, has expressed little interest in the league with USC and UCLA on their way out. NBC and CBS also appear set when it comes to college football. The Big 12’s decision to renegotiate early with ESPN and Fox and take a larger-but-under-market deal for the sake of security was a smart move to outflank the Pac-12 that also highlighted how far it, too, is from the Big Ten and SEC.
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The Pac-12 needs leverage, but Amazon and Apple aren’t that. A move to heavy streaming would dramatically decrease game viewership and threaten to speed the conference into irrelevancy. In a sport based around recruiting and donors, people need to find your games easily. ESPN knows this. It’s why Conference USA rushed back to ESPN as part of its new TV deal and away from streaming places like Stadium. Even if Amazon and Apple, which have been more prudent with streaming spending than other places, overpay for the sake of content on a potential sports-only app, it’s an incredible risk for a conference. This isn’t Major League Soccer.
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For years, forecasters predicted the sports TV money bubble was about to pop. They said there would be a limit to how far broadcasters would pay for live sports as cable subscribers went down. “TV Sports a Spectacular Bubble” read a Forbes headline in 2013. But as cable subscribers began to slump, it became clear that live sports were the only thing saving television from dropping even further, increasing their value. The NFL had 75 of the 100 most-watched broadcasts in 2021, so the NFL has continued to get more and more money from the networks. The Big Ten and SEC, with their large audiences, are about to take another financial jump up with their new TV deals. The 12-team College Football Playoff will be another boost, with Fox expressing interest in joining ESPN as a potential broadcaster.
Amazon is paying more than $1 billion per year for Thursday Night Football because it’s the NFL. It made a play for the Big Ten because it was the Big Ten. Even Apple, the most valuable company in the world, reportedly let the NFL take Sunday Ticket to YouTube TV in part because Apple didn’t want to increase its price for customers.
If you’re not the NFL, Big Ten, SEC, NBA, CFP, World Series or the NCAA men’s basketball tournament, your negotiating leverage may begin to fade as the biggest leagues take up more.
The thing to remember about streaming companies and live sports is that Apple and Amazon don't just throw bags of cash at content.
They are disciplined. They're not going to swoop in and give leagues/conferences any money they want. The NFL got Amazon $ because it's the NFL.
— Chris Vannini (@ChrisVannini) February 13, 2023
Take it from returning Disney CEO Bob Iger, who on a recent earnings call expressed a desire to keep NBA rights but said: “ESPN has been selective in the rights that they bought. I’ve had long conversations about this with (ESPN president) Jimmy Pitaro. And we’ve got some decisions that we have to make coming up — not anything particularly large, but on a few things, and we’re simply going to have to get more selective.”
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ESPN used to own college football. Now it lost the Big Ten and does not see the Pac-12 as such a priority as to overpay. Iger also said that while ESPN+ has grown nicely, he does not want to commit to an all-streaming ESPN or spin the company off unless it makes financial sense.
And that’s the dirty not-so-secret about streaming: It’s not actually working. The boom is over.
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Disney’s direct-to-consumer business — which includes Disney+, ESPN+ and Hulu — lost more than $4 billion in 2022. The financial losses continue to climb even as subscribers grow. It’s a big reason Disney stock is down 31 percent over the past year. NBCUniversal’s Peacock lost around $2.5 billion for the year, and CBS’ Paramount Plus also lost around $1.8 billion. These companies planned to lose lots of money and aimed for profitability by 2024 or 2025, but there is little sign of that yet. Dramatic cuts have come across the board.
Fox’s decision not to jump into the standalone streaming game and instead focus on the biggest live sports like the NFL, college football and the World Cup, has proven to be a more successful strategy thus far. It has increased its market share in college football, and despite the loss of cable subscribers, this year’s Super Bowl on Fox was the third-most-watched game ever and the highest in six years. As Fox Sports CEO Eric Shanks put it on a Sports Business Journal podcast, speeding up into streaming also speeds up the decline of linear TV, your actual money-maker.
What does it say when Netflix, the rare profitable streaming success, has opted against jumping into sports bidding wars, even after a recent decrease in subscribers? It has instead focused on sports documentaries and made smaller runs at sports like Formula 1 racing or the World Surfing League, showing no interest in major sports.
“We’re not in the business of live sports rights. We’re not in the business of renting,” Netflix vice president of nonfiction series Brandon Riegg told the New York Times.
While more games than ever are available to watch — a certain positive for fans — all of this doesn’t even touch on how cumbersome it is to watch live sports on streaming. Broadcast delays lag behind social media and betting sites. Some can’t pause or rewind. Switching between games can be a hassle and an even more frustrating process if you have to switch to another app.
On a busy college football Saturday, will casual fans who use one screen flip back and forth to Prime Video or Apple TV+ for one Pac-12 game if their favorite team isn’t involved? If conferences move into different streaming apps, the sport will be even more fractured.
“No one streaming sports service can fulfill what a sports fan needs,” Shanks said.
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The Pac-12 may still come out of this OK. It might sign a good enough deal with ESPN and a streamer and provide schools with money similar to the Big 12. Linear TV for sports is still in a good place. But the next round of college media deals in six or seven years is the moment when industry leaders believe major change will truly come. I dread the future of conference realignment, but if you’re not in the Power 2, it’s impossible to predict where you’ll be as the top conferences take an even larger market share.
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Live sports, particularly football, have kept linear TV alive, but there is no sign that streaming will save college football in the form we currently know it.
Season 3 of Ted Lasso should be good, though.
(Photo by Robin Alam / Icon Sportswire via Getty Images)
