If a headline about a potential broadcaster for your games gets a negative reaction, you’re not in a good place.
The Pac-12 is approaching a dire emergency. It can not be said otherwise. Tuesday’s New York Post report that Apple TV+ is a potential landing spot for Pac-12 sports landed like a lead balloon among fans, and for understandable reasons.
That doesn’t mean the league is on the verge of breaking up, or that it can’t secure a good-enough TV deal for the short-term future. It will probably be okay. But the Pac-12 could be the coal mine canary for college conferences outside of what will become the Power 2 of the Big Ten and the SEC.
Streaming will not be the answer to saving college football as we know it. We know this because streaming doesn’t save TV.
You can’t entirely blame Pac-12 Commissioner George Kliavkoff. He needs to find some other interested bidders to gain some leverage in negotiations with ESPN after inheriting 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 the way out. NBC and CBS also appear to be deadlocked when it comes to college football. The Big 12’s decision to renegotiate early on with ESPN and Fox for a larger but below-market deal for safety reasons was a smart move to outperform the Pac-12 that also showed just how far along it went away from the Big is Ten and SEK.
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The Pac-12 needs leverage, but Amazon and Apple aren’t. A switch to heavy streaming would drastically reduce the game’s viewership and threaten to hasten the conference into irrelevance. In a sport based on recruitment and donors, people need to be able to find your games easily. ESPN knows this. That’s why Conference USA returned to ESPN and away from streaming venues like Stadium as part of its new TV deal. Even if Amazon and Apple, which have been more cautious about streaming spending than other places, overpay for the content of a potential sports-only app, it’s an incredible risk for a conference. This isn’t Major League Soccer.
For years, forecasters predicted that the sports TV money bubble was about to burst. They said there would be a limit to how far broadcasters would pay for live sports if cable subscribers fell. “TV Sports a Spectacular Bubble” was a Forbes headline in 2013. But as the number of cable subscribers began to decline, it became clear that live sports was the only thing keeping television from falling further and increasing its value. The NFL had 75 of the 100 most-watched shows in 2021, so the NFL continues to get more and more money from the networks. The Big Ten and the SEC with their large audience are about to take another financial leap with their new TV deals. The 12-team college football playoffs will be another boost, with Fox expressing interest in joining ESPN as a potential broadcaster.
Amazon pays more than $1 billion a year for Thursday Night Football because it’s the NFL. It made a game for the Big Ten because it was the Big Ten. Even Apple, the world’s most valuable company, reportedly let the NFL take over Sunday ticketing for YouTube TV in part because Apple didn’t want to raise its price to customers.
Unless you’re in the NFL, the Big Ten, the SEC, the NBA, the CFP, the World Series, or the NCAA men’s basketball tournament, your bargaining power may diminish as the biggest leagues take up more space.
Take it from returning Disney CEO Bob Iger, who on a recent conference call expressed a desire to keep the NBA rights but said, “ESPN has been selective about the rights bought. I’ve had long conversations about this with (ESPN President) Jimmy Pitaro. And we have to make some decisions – not big ones, but a few things and we just have to be more selective.”
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ESPN formerly owned college football. Now it’s lost the Big Ten and doesn’t see the Pac-12 as such a priority to overpay. Iger also said that while ESPN+ has grown well, it doesn’t want to commit to an all-streaming ESPN or spin off the company unless it makes financial sense.
And that’s the dirty, not-so-secret secret of streaming: It doesn’t really work. The boom is over.
Disney’s direct-to-consumer business — which includes Disney+, ESPN+ and Hulu — lost more than $4 billion in 2022. Financial losses continue to mount even as subscriber numbers grow. That’s a big reason why Disney stock has fallen 31 percent over the past year. NBCUniversal’s Peacock lost about $2.5 billion over the year, and CBS’ Paramount Plus also lost about $1.8 billion. These companies planned to lose big bucks by 2024 or 2025 to become profitable, but there’s little sign of that happening yet. Dramatic cuts have been made across the board.
Fox’s decision not to get into the standalone streaming game and instead focus on the biggest live esports like the NFL, college football, and the World Cup has proven to be a more successful strategy so far. It’s increased its market share in college football, and despite losing cable subscribers, this year’s Super Bowl on Fox was the third-most-watched game of all time and the highest in six years. As Fox Sports CEO Eric Shanks put it in a Sports Business Journal podcast, the acceleration of streaming is also accelerating the demise of linear TV, your real moneymaker.
What does it say when Netflix, the rare profitable streaming success, has decided against getting into sports competitions even after a recent drop in subscribers? It has instead focused on sports documentaries, making smaller runs in sports like Formula 1 racing or the World Surfing League without showing any interest in major sports.
“We’re not in the live sports rights business. We don’t rent,” Brandon Riegg, Netflix’s vice president of nonfiction series, told the New York Times.
While more games are available to watch than ever before – a definite plus for fans – none of this even touches on the awkwardness of watching live sports broadcasts. Transmission delays lag behind social media and bookmakers. Some cannot pause or rewind. Switching between games can be a hassle and even more frustrating when you need to switch to another app.
Will casual fans hopping back and forth to Prime Video or Apple TV+ for a single-screen Pac-12 game on a busy college football Saturday when their favorite team isn’t involved? When conferences are moved to different streaming apps, the sport becomes even more fragmented.
“No streaming sports service can meet the needs of a sports fan,” Shanks said.
The Pac-12 can still get out of this situation just fine. It could land a good-enough deal with ESPN and a streamer, and provide schools with money similar to the Big 12. Linear television for sports is still in a good place. But the next round of college media deals in six or seven years is when industry leaders believe the really big changes are coming. I fear the future of conferencing realignment, but unless you’re in Power 2 it’s impossible to predict where you’ll be as the top conferencing take an even larger market share.
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Live sports, especially football, have kept linear television alive, but there’s no sign that streaming will save college football as we currently know it.
Season 3 of Ted Lasso should be good though.
(Photo by Robin Alam/Icon Sportswire via Getty Images)