College Football Stares Down Major Changes in the Form of Cord-Cutting

Linear television has been battling the rising tide of OTT programming and cord-cutting for years as subscribers flee toward streaming platforms. But sports appeared to be a major holdout against the over-arching market effects... until it wasn't.ESPN, sports' largest source of programming, started reporting major losses in subscribers in 2016/17 -- though not necessarily more than the rest of cable's top players. The results were major layoffs, though the Disney-owned family of networks continues to make more money than ever, according to subscriber fees (at $8 per subscriber, for carriers). Jimmy Pitaro took over as president of the network earlier this year and will manage ESPN's larger emphasis on digital as part of Disney's overall OTT endeavor. That started with ESPN+ and is bound to expand further to meet consumer preferences.But even as the network moves positively in that direction, there's still the lingering, exorbitant rights fees paid out to various leagues and college sports conferences in recent years. Sports Business Journal ran down the full list in 2017:You'll notice that beyond the contracts with the NFL, NBA and MLB (all split with other networks), college sports inventory is the largest portion of these payouts. The NCAA's "Power Five" conferences, boosted largely by football inventory, all have contracts in place that pay out at least $100 million per year (with the SEC at the top of that list at $300 million annually). Not included there is the Big Ten's newer deal, which pays out $190 million per year to the Big Ten as well. The College Football Playoff, which is literally just a collection of six games every bowl season, earns almost as much for the leagues as the overall TV inventory, too -- a staggering $608.33 million annually. That number is split between leagues, with the lion's share going toward those Power Five conferences (ACC, Big Ten, Big 12, Pac-12, SEC).So what's the problem? Well... aside from the recent Big Ten deal, all of these contracts were negotiated prior to the cord-cutting really gaining steam. Also, the ACC and SEC are the only conference locked in past the 2023-24 sports calendar. What happens next is anyone's guess.Experts are starting to wonder, however. TV contracts triggered a massive conference membership reshuffling back between 2010 and 2014, leading to these higher fees being doled out by ESPN and other networks. Everyone in college sports -- networks, conference commissioners, school athletic directors and presidents -- all bet on these fees just continuing to rise. It's clear they won't be now. That trend could start with one of the biggest fish, the Big Ten.https://www.youtube.com/watch?v=RBlgN85wB6UYahoo Sports' Dan Wetzel recently dove into the problem the conference is already running into before its rights deal even expires. Despite widespread pick-up early and massive pockets of alumni for its 14 schools all over large metro areas around the country, Comcast could very well drop the Big Ten Network (a large source of the league's TV revenues) on its basic cable packages when its deal wraps on September 1.That's one thing for areas outside the footprint (which includes states like Pennsylvania, Ohio, New Jersey, Maryland, Michigan and others in the Midwest), where it's already off of tier-2 packages. It's another for those in-conference markets themselves, which could potentially end up shut out of the content now. For a college sports business that's incredibly reliant on TV revenues, it's a concerning view into the future.The future for the Big Ten could also be the present for the Pac-12. The San Jose Mercury News discussed the repercussions of what AT&T and DIRECTV walking away from the Pac-12 could mean, and it doubles down on the problems the West Coast-centric conference already suffers from. The Pac-12 Network -- its own version of the Big Ten's original niche content cash cow idea -- has been owned and operated by the league since day one, without an existing media partner (the ACC, SEC and Big Ten all use a broadcast partner like ESPN or Fox). They've also never been on DIRECTV, which boasts over 20 million subscribers in the U.S. They're also lagging behind the other Power Five conferences in terms of per-school payouts.This all comes into focus for the ACC, too, as it prepares to launch its own network (with ESPN) next August. There's talk of $8-10 million in additional TV revenues per school, but the 15-team conference is short on traditional (large) football powers that drive viewership -- Clemson, Florida State and Miami being the biggest brand names -- and keeps a good deal of its alums along the Eastern seaboard only (from New York City down through to Miami). The plan has always been to launch a linear network, but is there any more appetite for it in today's environment? Content on these conference networks has contained a lot of overflow games and rehashed programming (old games, repeat studio shows, etc.). It's hard to believe that would be the way forward if the ACC or any conference launched a network today and wanted broad pick-up.One potential saving grace for all of the leagues could be that whether games are on linear TV or streaming, there's an attentive audience for advertisers to cater to.Using data from iSpot.tv, the real-time TV ad measurement company with attention and conversion analytics from more than eight million smart TVs, you can see the Big Ten Network's high attention scores (average over 92%) and big impressions numbers around football season -- making it very hard to walk away, both for carriers and brands alike.Same goes for the SEC Network, though strangely with a spike around basketball instead. Attention scores were similarly high, however, despite the lesser impression numbers overall.Reducing TV rights fees sounds like a crippling move for college sports in some respects, but that's also influenced by a view of the environment right now. As ESPN builds out its streaming capabilities, advertisers will come with. Sports programming (especially football) is still driving both impressions and attention. So whether it's through linear or OTT, college sports stands to remain a viable place for brands to advertise. Even if that's at a slightly adjusted rate across the board, that should keep all of these leagues, and the schools that comprise them, alive and well.