RE: Hatin' on the ACCN revenue
I'm really curious to see where this goes. $8-10M INITIALLY seems awfully aggressive. Considering that hasn't been really confirmed anywhere, it wouldn't shock me (as Nole said) that Wilcox misspoke (threw out what were really long term projections as "initial") or was just mistaken.
That said, "sources" really haven't really aggressively walked that number back as much as I might have thought either, and it's been bandied about enough.
The thing is, the ACC clearly likes to sandbag everything, so that when results come out, even expected or mediocre results can be treated like huge victories. They could have probably simply said years earlier that an ACC Network was coming, but it was going to take some time...but keep the uncertainty going, so that when it IS announced "WOW, we didn't think they could do it! Another big win!!!" instead of "what, why is it going to take two and a half years to get this going?"
I mean, when the ACC signed GORs, there was practically a parade and coronation for Swofford and company to celebrate "WE AREN'T GOING TO BREAK UP ANY FURTHER!!!" What? in normal circumstances, the mere confirmation that you are going to continue to exist isn't exactly a triumph, but because the ACC gives so little, and doesn't address uncertainty, they get the spin they want.
The PAC and the Big 12 are the opposite, they're on the PR offensive all the time, and in the case of the PAC you see what happens when you shout optimistic projections from the rooftops and don't deliver.
The B1G and SEC have a good balance, they work their PR hard and appropriately...more so than the ACC, but they also have some restraint and act like they've been there before. To some extent, that's easy when you sit in the position they're in I guess.
But the ACC's "silence or sandbagging" approach can be incredibly frustrating, because as an ACC fan you get next to nothing in regards to hope and confidence. And it can affect overall coverage, when you trade months and months of nothing or negative press for brief shiny victories. To be fair, it does avoid them falling on their face I guess which is good, but I'd argue the real reason is to keep from anyone being accountable for their promises or claims (again, see the way Larry Scott and the PAC are being ANNIHILATED in their home media, despite still generating bigger payments than the ACC with a league that hasn't been a fraction as successful on the field/court).
Anyway, knowing that's the way the ACC works, I try to read what to expect out of the Network, and I'm not sure. I was a little surprised that there weren't more "sources" to ACC media walking back Wilcox's number. If the ACCN generates say, $4M the very first year, the ACC wants to throw a party about it, so letting that number linger there surprises me some. Is there enough confidence in the ACC office that they might actually be in that neighborhood, that it's not worth trying to walk back?
I guess I'm surprised that we've not seen more comments along the lines of:
"We expect it to be a minor increase, but welcome, and will take a number of years to grow."
"While the SECN was a big profit center out of the box, the BTN had a much longer growth trajectory, and the fact that the PAC Nets are still finding their footing shows that the norm is for these things to take time to show real returns."
"The money is important, but it's really about the exposure. That's how success will be measured."
To me, those are the lines that I would expect from the ACC's playbook, so they could make a $4-5M payout sound like they've landed a man on the moon. I don't know how to read that. Optimistically, maybe there is confidence that the projections show they don't have to sandbag that much...that the number will be impressive enough on their own. Pessimistically, maybe they honestly don't know enough how it will go (hard to believe this close out) to know what to be saying now. Or maybe it's looking so rough that there's nothing to be said to make it better. One thing is for sure, the ACC always errs on the side of saying nothing, of restricting information, so maybe it's just that if things aren't clear yet.
There are some positives. I always thought that the strategy of waiting until it could be included in the overall Disney deals with carriers was genius, as opposed to having to get it "added" like the SEC network, or like the PAC or BTN has to be added independently. To me, that definitely shakes up a lot of the takes that "Well, the SEC gets $1.25, so clearly the ACC is only worth $0.45 per home" and that kind of thing. Because it's being packaged in the overall Disney deal, what the ACC gets isn't really primarily a matter of how much it's sports are "worth" vis a vis the BTN or SECN, it's worth what ESPN can get them to pay for it in their overall negotiations. Nothing would really shock me here, if the ACC was much closer to the SEC than they deserve. I kind of expect that maybe Disney shoot to get the SECN a raise, and the ACC close to what the SEC launched for. I don't really have a basis for that other than that I fully believe that ESPN is trying to make money on this. But that's just an uneducated guess...maybe they're giving it away for a nickel, I don't know.
I think that carriage strategy is playing out at least (although we have no idea about the money). So far, we know that they've gotten carriage with the OTT services, then Optimum in NYC, and Verizon. That's everything that's been open so far, and the ACC Network was picked up with nary a word of resistance. Both the Optimum and Verizon deals were done without a real programming standoff, a minimum of conflict in the press, and were completed easier than expected. Each was considered a "win" for Disney, who got all the channels they wanted carried, and got significant increases in their fees. ATT also comes up before the ACCN launches, and I would expect the same, as these deals for the basis for further deals, and ESPN obviously has a working strategy with this stuff.
HOWEVER...from all I can tell, DirectTV, Comcast, and Dish are not up for Disney renewal before the launch. Unless I misunderstand, these WILL have to be direct add-ons. And these are very, very big. Frankly, despite the ease at which they've been picked up so far, if they don't land these, it's going to be a big problem. You might have a situation where the ACC doesn't get carriage on these for a couple years until their Disney deal is due. That would be unfortunate both for revenue and for optics. I think it's very important to the ACC that they have full carriage. I'm sure there's a strategy here to get added on these carriers, but that's the thing to watch. Hopefully the strategy won't just be to count on hundreds of thousands of subscribers threatening to cancel if they don't get access to the VT-Wake Forest game.
The other thing about adding on to those carriers, is it kind of cuts against the "ACC Network is worth what ESPN can get for it by holding the Disney Channel hostage" strategy I referred to earlier. If there's a factor that does cause the ACC to get, like 30 cents on the dollar to what the SECN gets, it comes into play here. From my understanding, these contracts can have "most favored" clauses that means if you later give the channel another provider for less money, then the contracted price with the original company reverts down to the price you just gave. That's what's screwed the PAC and DirectTv. They can't just cave to DirectTV now and give them the PAC for a pittance just to get it on...because once they do, all the other deals they DID ink will revert to the DirectTV price. If they're getting $0.75 from ATT now, and give it to DTV for $0.25, ATT and all their other contracts drop to 0.25. So they're stuck.
Which I think means, ESPN couldn't overprice the ACCN fee too much in their Optimum and Verizon negotiations, because it's still got to be a price that Comcast and DirecTV are willing to add ad hoc. Even if they could force Verizon to eat $1.50 for the ACCN, they wouldn't because it would never get added at that price with Comcast. So I think that still means that the ACCN will get a fraction of the SECN on a per home basis, I just don't know HOW small a fraction, if it will be closer to 80% or closer to 40%.
So I think there are reasons to be optimistic, and reasons to be very cautious. At this point, I personally don't think that the ACCN will be an outright failure, i.e. not get carriage, not generate any money. I also am far from buying into the rosiest of projections. Right now, I'm about:
2% - Abject failure
23% - Most modest possible baseline to claim "success" ($2-3M?)
65% - Moderate for meaningfull success ($5-6M?)
10% - Wildly successful ($9-10M?) (yes, "so you're saying there's a chance")
Important disclaimer...I don't know sh-t really. This isn't my business or anything. While I don't think I've materially misrepresented anything as a fact, my CONCLUSIONS from that are just my own, and could and probably will be wildly wrong. I'm not saying this is how YOU should think about it...this is just what I'M thinking about it.
And one more thing...something that I can't believe just occurred to me while I was typing that. I know the Disney deal with ATT comes up this fall. I've been counting that ATT thing as a totally different animal than DirectTV, forgetting the fact that ATT bought DirectTV. I have to still imagine they are separate negotiations, as ATT would have inherited DTV's contracts. If ATT coming up meant that DirectTV was also up this year...I would push more % into the optimistic projections. But I don't think that's how it's going to work.
But I wonder if it will come into play, for the better or worse, that theoretically ATT could use picking up the ACCN on DTV as a bargaining chip, or ESPN leverage the ATT negotiations to get DTV to pick up the ACCN as part of the package.
I literally have no idea what to think of that.
(This post was last modified: 02-21-2019 12:58 PM by Lou_C.)
|
RE: Hatin' on the ACCN revenue 