ESPN Pays Up To Keep NCAA Championship Rights. What’s Next?

On Thursday, ESPN locked up the media rights for NCAA championships across 40 sports, for an impressive $115 million per year over the next eight years — a significant increase compared to the current expiring deal paying out $34 million per.

While this new agreement does not include college football (negotiated between individual conferences and media partners) or the NCAA Division I men’s college basketball tournament (WarnerBros. Discovery and Paramount combine to pay $891 million per year) rights, it will still include the NCAA Division I women’s basketball tournament.

The new deal values that event at $65 million on its own, which could wind up being a steal based on the tournament’s growing popularity.

On top of highest-ever ratings for the women’s tournament on TV last year, Tubular Labs found interest extend to social video platforms as well, as audiences and brands excitedly talked up the action on the court. Tubular found that social video views around the event increased 5x year-over-year. That jump also fell in line with rising increase across women’s sports overall; Tubular found women’s soccer and softball views soar as well, in coordination with the FIFA Women’s World Cup and NCAA Division I Softball Tournament, respectively.

The influx in money should serve as a major win for the non-football and men’s basketball sports, which typically don’t turn a profit and balance out the budget with surpluses from the so-called “revenue sports.” But the outlay also serves as a core feature in ESPN’s future plans. The cable sports giant will be launching its direct-to-consumer app no later than the year 2025, and with that, will need even more live game content to justify the subscription in a landscape that sees consumers shedding services.

ESPN+ already has plenty of these games from smaller conferences and smaller sports, of course. But the money paid here makes sure they’re the only home to the games that matter most. Over the years, ESPN has thrived at eventizing matchups far beyond their original footprint (North Carolina-Duke men’s basketball games didn’t become national TV events on their own, after all). This new deal, which shines a larger light on more sports and postseason play, aims to secure ESPN’s place as THE hub for the most important college sporting events.

With this expansive amount of content locked up, ESPN can also focus on how it prepares the rest of its offering for the DTC app’s arrival.

On the college front, the ACC is apparently locked in for another decade or so (though maybe not), as is the SEC and half of the Big 12 inventory, along with rights for other, smaller leagues. The expanded 12-team College Football Playoff will be up for renewal, and ESPN figures to secure at least part of that enterprise, if not the whole thing — though Fox appears ready to make that bidding process more difficult, according to Front Office Sports.

And then there’s the NBA question. The league could demand as much as $8 billion per year paid by various partners, including ESPN. New bidders like NBCUniversal, Netflix, Apple and/or Amazon could help lighten the blow of that increase for existing rightsholders like ESPN and Warner Bros. Discovery. But ESPN basically has to pay for NBA rights too, in order to keep audiences engaged and tuning in every night.

The network could also try to fold NBA League Pass into the ESPN app, the same way it did with NHL.TV on ESPN+ and Hulu. Though the price tag for that would likely be much higher than what the NHL is getting.

All of this is to point out just how much of a tightrope ESPN is on right now.

When it was the biggest cable network on lucrative cable packages, it was nice to have appointment viewing on, but it didn’t need to happen every night. Ultimately, ESPN was the home of the highest volume of premier sporting events. So when fans wanted to tune into something, it was there waiting for them.

The dynamics of a standalone streaming app are completely different, however. Going it alone, ESPN is not only cutting itself off from lucrative carriage fees, but also the luxury of programming ebbs and flows.

You see this with all of the current streaming services, including fellow Disney apps Disney+ and Hulu. Data from Parrot Analytics shows how much demand is driven by new vs. old titles, and the significant balance that streameres need to strike while serving library titles to subscribers.

ESPN doesn’t have that luxury of leaning on favorite library titles, really, aside from some 30 for 30 documentaries, and even that’s a stretch. Of all of the AVOD services out there, ESPN’s would be the one almost entirely dependent on live viewing. That means BIG programming ever day and night in order to keep audiences around.

Audiences are already fickle enough to drop services like Netflix and Hulu the second they can’t find a hot new show to watch for too long. If ESPN’s primetime slate strikes out more often than not, there’s simply no way the service will be able to retain subscribers — especially at $22 (or more) per month rate that will far outpace what other, more diverse services cost.

That’s not to say ESPN is doomed at all here. But a DTC app makes the job harder, and the price tag required to succeed increases considerably as well. Will casual fans pay up for an all-sports-all-the-time app? If they don’t, all of these mega deals are going to be pretty tough to stomach by the time we get to the end of this decade.