UNIVERSITY PARK, Pa. -- Conference expansion is about the money. Everyone knows this, and Maryland president Wallace Loh said as much when he explained Maryland's move to the Big Ten as a way for the athletic department to remain financially viable in the long term. He spoke bluntly when describing the source of financial viability.
"Everyone thinks you make your money in the seats," he said to reporters on Nov. 19 when announcing his university's move. "You make it on eyeballs on a screen."
Adding Rutgers and Maryland should, theoretically, increase the Big Ten's exposure and ability to make "screen" money through a new deal with ESPN/ABC and its own network. But attracting eyeballs for the Big Ten Network will be a difficult task. The Big Ten Network will have to infiltrate two sports-crowded markets that favor professional teams over college while trying to maximize profit based on licensing fees and gaining presence on television providers.
Plenty of eyeballs are available. New York City, according to Nielsen data, has 7.3 million television-viewing homes. Washington has 2.3 million. Baltimore has 1 million.
SNL Kagan, a media analysis group, estimates the Big Ten Network (BTN) receives 97 cents monthly per subscriber in Big Ten markets and six cents out of market by charging that amount for television providers to carry the network. So in Columbus or Omaha, for instance, where the BTN is primarily available on standard cable tiers, the conference makes 16 times as much per subscriber as it does right now in New York, where the channel is primarily available on expensive premium tiers or separate sports packages that cost consumers extra.
The Big Ten will want its network carried on the standard tiers of television providers and will want to charge the 97-cent carriage fee that they currently charge in other Big Ten markets. If it succeeds in the markets of Baltimore, Washington and New York the Big Ten would receive about $120 million more in revenue per year, a significant increase over the BTN's $242 million in revenue in 2011, as estimated by SNL Kagan.
But turning the six cents into 97 cents for all the television sets in the targeted East Coast markets won't be easy.
"The only thing they can do is show them numbers with operators in other locations and try to convince them that there is a market," said Alan Breznick, a cable industry analyst for the telecommunications research firm Heavy Reading, "which is going to be an uphill battle."
In 2007, the BTN initially launched to 30 million subscribers (it now has nearly 50 million, according to SNL Kagan), but it also had prolonged disputes with major cable providers such as Time Warner Cable and Comcast. Though the Big Ten was eventually successful with few exceptions, providers bristled at paying the carriage fee and packaging the channel on a standard tier, which trickles down to the bills of consumers.
New York has featured especially contentious disputes between sports networks -- generally the most expensive programming to carry, and television providers. The metropolitan area is largely serviced by Cablevision, Time Warner Cable and RCN.
When the YES Network, which televises Yankees games, launched in 2002, Cablevision didn't carry it for two years. Earlier this year, Time Warner Cable did not carry the MSG network, which televises Knicks games, for nearly two months because of pricing issues. A settlement was reached only because fans' desire to experience the Jeremy Lin craze pressured the sides to settle.
These disputes were over sports networks which televise professional sports teams, which are of greater popularity in New York.
Nate Silver, the New York Times mathematician and statistician best known for highly accurate presidential election projections, completed a study on the geography of college football fans last year. Though New York has the highest total of college football fans of any metropolitan area, they account for only 14 percent of the population, according to Silver's data. Rutgers has the most football fans in the area at 607,000, which is 3 percent of New York's population.
Using these numbers, the addition of Rutgers means that only 3 percent more of the population will care about the Big Ten Network than already does, which might not be enough to pressure television providers into paying a higher amount for the network and putting it on a standard tier.
Breznick said that if the Big Ten Network wants to receive a spot on a standard tier in New York or Washington it might have to waive its carriage fee for television providers or actually pay them at first. Rare moves such as these allow networks to earn advertising revenue in top markets and ideally build enough viewership to leverage a better payout when the contract comes up again.
Fox News did this when it launched in 1996, paying television providers nationwide an estimated $300 million, according to Ad Week. Fox, though, could do much more than provide a blueprint for breaking onto standard tiers.
The Fox Entertainment Group, owned by Newscorp, owns 51 percent of the BTN. Newscorp purchased YES in late November. Fox could package the BTN with its other offerings, threatening to deprive the television providers of channels such as Fox News and YES if they don't accept the BTN.
"With the backing of Fox, it should make a big difference," Breznick said.
Difficulty securing favorable contracts for the BTN would be costly but not crippling. The Big Ten would likely still be able to negotiate a more lucrative contract from ABC/ESPN because of its new teams and eastern presence. Failure of the BTN in New York, Baltimore and Washington would mean splitting the current or only slightly larger amount of BTN profit among a greater number of teams.
The BTN has conquered reticent television markets before but none as difficult or lucrative as the ones it has eyed for expansion, and the network isn't sharing its plans at this point -- if it has even decided on a strategy. BTN president Mark Silverman declined comment for this article through a spokesperson.
"Since all of this just happened and the two schools don't join until 2014," she said in an email, "there isn't much that Mark can say [or knows] about how it will all work."mobilehome - psusports
Mark Dent: firstname.lastname@example.org, Twitter @mdent05.