(02-18-2017 05:41 PM)gostangs Wrote: Fox isn't going to keep the NBE at that level when it comes up since they aren't worth it - and nobody else is going to bid for them at that level next time. They certainly aren't going to increase that contract to add those schools to it.
You don't get it. 60-90% of a cable channel's revenue is generated from subscriber fees, not advertising revenue. Ratings are somewhat irrelevant. Because of the BE contract, FS1 on Directv, Dish and basic cable in Chicago, Milwaukee, Omaha, Cincinnati, Phily, DC, Indianapolis, Newark, parts of NY and Providence. At $1 per month per subscriber, you are looking at several million dollars per month, easily justifying the the BE contract. You drop the BE, their is very little incentive for the cable networks in those cities to keep FS1. The occasional baseball game has limited value in some of those cities, and almost no value in others. Now, would the contract increase if the BE added UConn or UC? That is a probably a bigger question.
On the other hand, what markets are on ESPN solely because of the AAC? Memphis, maybe. But, I doubt it since Memphis is an SEC town. Greenville? Possibly. Whether the AAC signs with ESPN or not, it doesn't add revenue to ESPN. There is simply no incentive for ESPN to pay $100+ million to a conference that doesn't move the needle as far as subscribers. The AAC is probably more valuable to NBCSN, CBSSN, possibly FS1 (although they have significant distribution now) or some small network like BeInSports. But, BeINSports gets about a .10 per subscriber. Adding 20 million subscribers would only generate $24 million a year in revenue for the network, well short of the amount needed to support a $100 million per year contract.
BTW, ESPN is estimated to earn about $7.2 billion in subscriber fees this year and spend $7.1 billion in rights fees. Next year, rights fees will exceed subscriber revenue. Therefore, ESPN has to cover all its operating expenses with advertising. While ESPN is probably still making money, its costs for production and talent is significant. I can see why Disney appears to be concerned.