Jon Wilner of the Mercury News reported Monday the execs were CFO Brent Willman and Pac-12 Networks president Mark Shuken, and the partner was Comcast.

The overpayments stretch across multiple years, and were first brought to light after a 2017 audit. But Willman and Shuken failed to inform the Pac-12 Board or its external auditors and the overpayments continued. Comcast, in October 2022, claimed it had been overpaying the Pac-12 each year since prior to 2016, with the total overpayment now at $50 million.


— The audit that discovered the overpayments was requested during the tenure of one Pac-12 Networks president and concluded during the tenure of another.

— The timeline indicates the distribution partner (Comcast) “claimed that it had been overpaying the Pac-12 each year since prior to 2016.”


— The timeline indicates the distribution partner (Comcast) “claimed that it had been overpaying the Pac-12 each year since prior to 2016.”

The audit was delivered to Shuken and Willman in December ’17, midway through the 2018 fiscal year.

An examination of Pac-12 Networks finances since the year after their launch (taken from the conference’s annual tax filings) shows the following annual revenue:

FY14: $106.8 million
FY15: $116.6 million
FY16: $128.2 million
FY17: $127.9 million
FY18: $127.4 million
FY19: $116.9 million
FY20: $112.8 million
FY21: $37.7 million

The year-over-year drop in FY19 could be attributed, at least in part, to a change in carriage agreements.

In November ’18, AT&T stopped carrying the Pac-12 Networks on U-Verse.

The revenue hit was not disclosed by the conference but was believed to be substantial given that hundreds of thousands of Pac-12 Networks subscribers used U-Verse.

— Willman was the Pac-12 Networks’ senior vice president for finance from their creation through 2018, at which point he was promoted (by Scott) to CFO of the conference and the networks.

His involvement has taken a number of Pac-12 insiders by surprise.

“Brent is very upstanding,” said one source.

And the mystery continues.

“If they had an audit,” the source added, “why did the distribution partner keep making overpayments in future years if they knew there was a problem? “It doesn’t make any sense.”


Link
https://www.mercurynews.com/2023/01/23/p...-timeline/

The P12N was Larry's baby. He's the one who told ESPN and FOX to screw off, that he would handle it. That the Pac 12 is a Media Company.

The original audit came out in April 2017. The same month, P12N CEO Lydia Murphy-Stephans resigns. Hmmmmm. Sounds like she wanted to come clean, and Larry would not have it. So she quit.

Shuken gets hired in September 2017 and gets made aware of the audit two months later. No way he continues the overbilling without Larry Scott's knowledge and approval.

I'm sure Scott protected himself as best he could in his "separation agreement," but I wonder if this will be the first case of a Conference suing a former commissioner for malfeasance.

Bringing some clarity to Pac-12’s financial issues with Comcast

In the spring of 2017, the Pac-12 Networks asked an outside auditing firm — a firm described by the Pac-12 as an industry leader — to examine the payments Comcast was making to the Pac-12 Networks.

This is not an unusual step in the media distribution business. Companies regularly seek audits to make sure monthly or annual payments are accurate.

And Pac-12 Networks executives did not think Comcast’s payments were accurate, according to sources. They thought Comcast was underpaying. They were surprised by the audit’s conclusion that Comcast was, in fact, paying too much.

“Nobody thought it was credible,” one source said. “There was disbelief,’” the other source said.

How much was too much? About $5 million annually, according to sources.

At that point, the logical step would have been to cross-check the audit results with the Pac-12’s internal data and examine invoices sent to Comcast for the year in question (2016). Except the Pac-12 had none of that, because Comcast didn’t share its subscriber data. The situation wasn’t unusual in the media distribution business.

“You have to take the distributor at their word,” one source said. “You don’t know what their (subscriber) data is. And if the payments seem light, you ask for an audit.”

“The situation wasn’t built on something the Pac-12 could check,” the second source said, “because the payments were being made based on Comcast’s internal data. They couldn’t correct it, because it was all on Comcast.”

The only way to gain visibility into the accuracy of payments is to request an audit. It’s standard practice in the media distribution game. Sources believe Comcast was double-paying the Pac-12 for a portion of its subscriber base — likely for the customers who received both the Pac-12 Networks’ national feed and one of the regional feeds.

Meanwhile, executives remained miffed at the results of the audit and convinced that Comcast was, in fact, underpaying the Pac-12, according to sources.

Because the Pac-12 commissioned the audit and Comcast was solely responsible for the payment amount based on its proprietary subscriber data, a source said, the Pac-12 was not obligated to act on the results.

“They thought, ‘That can’t be right,’” a source said. “The results were so different from what they expected that they didn’t close the audit. So Comcast was never informed.”

And the overpayments continued — by about $5 million annually, according to one of the sources. That amount makes sense in this respect: There have been 10 fiscal years since the launch of the Pac-12 Networks.

If Comcast, a founding partner, overpaid the Pac-12 by about $5 million annually for 10 years, that’s $50 million — the amount cited in the claim filed by Comcast in October. (That claim prompted the Pac-12 to investigate the matter with the use of an outside firm, Cooley LLP.)

Sources believe the company will simply withhold payments totaling $50 million (approximately) over the remaining two years of the carriage contract — about $2 million per school per year.




Link
https://www.seattletimes.com/sports/uw-h...h-comcast/

Doctor: You've got a small tumor.
Patient: You're joking. I feel great. I don't believe you. And I refuse to get a second opinion

5 years later

Doctor: You've got a big tumor.
Patient: Wait, you weren't joking way back when?

So, basically the PTB at the PAC thought Comcast would never notice that they had been overpaying? Wouldn't their next contract have made that unlikely?

(01-25-2023 09:24 AM)ken d Wrote:  So, basically the PTB at the PAC thought Comcast would never notice that they had been overpaying? Wouldn't their next contract have made that unlikely?

It seems that the Powers That Be at P12N thought that there was no way their hired auditors were right, and so they ignored the audit.

NARRATOR: The auditors were almost certainly right.

(01-25-2023 10:50 AM)johnbragg Wrote:  

(01-25-2023 09:24 AM)ken d Wrote:  So, basically the PTB at the PAC thought Comcast would never notice that they had been overpaying? Wouldn't their next contract have made that unlikely?

It seems that the Powers That Be at P12N thought that there was no way their hired auditors were right, and so they ignored the audit.

NARRATOR: The auditors were almost certainly right.

Having done some auditing myself about 50 years ago, I can say with some certainty that they are almost always right when they deliver bad news.

Maybe P12N leaders’ disbelief was a plausible excuse when the audit results were first presented in 2017. But over time the burden of proof shifts to the individuals with inside knowledge. They’re aware of the financial risks and are gambling their entity’s reputation and goodwill.

I’m curious how much Kliavkoff knew or understood about this issue. It doesn’t help the PAC negotiate a new media deal, but it’s being reported by a journalist with a strong relationship to the PAC.

How come embezzlement isn’t being mentioned as a possibility? It sounds like this money was being distributed, but this needs some forensic accounting to make sure they get the overpayments weren’t just going into someone’s pockets.

(01-25-2023 03:55 PM)jrj84105 Wrote:  How come embezzlement isn’t being mentioned as a possibility? It sounds like this money was being distributed, but this needs some forensic accounting to make sure they get the overpayments weren’t just going into someone’s pockets.

There's no indication of embezzlement. The money flowed from Comcast to the P12N, to the PAC-12 schools. It's just that more money flowed than was supposed to flow.

Jon Wilner, in what is likely the most detailed published report so far, says the situation is becoming clearer. No plausible reason exists to suspect malice or self-dealing on the part of any specific individuals. The overpayment by Comcast to the PAC is a case of 'mismanagement' stemming from conference finance officials lacking access to Comcast's subscriber data and not accounting correctly for that blind spot.

The remedy, meanwhile, seems pretty straightforward: 'Sources believe the [media] company will simply withhold payments totaling $50 million (approximately) over the remaining two years of the carriage contract—about $2 million per school per year.'

https://www.seattletimes.com/sports/uw-h...h-comcast/

(01-24-2023 05:16 PM)CougarRed Wrote:  The P12N was Larry's baby. He's the one who told ESPN and FOX to screw off, that he would handle it. That the Pac 12 is a Media Company.

The original audit came out in April 2017. The same month, P12N CEO Lydia Murphy-Stephans resigns. Hmmmmm. Sounds like she wanted to come clean, and Larry would not have it. So she quit.

Shuken gets hired in September 2017 and gets made aware of the audit two months later. No way he continues the overbilling without Larry Scott's knowledge and approval.

I'm sure Scott protected himself as best he could in his "separation agreement," but I wonder if this will be the first case of a Conference suing a former commissioner for malfeasance.

Scott knew of this and approved of it, no doubt. However, we are all assuming that the Pac did something wrong here. A better question is, how the heck did Comcast keep overpaying for 5 more years after the audit was conducted? I'd be inclined to call that a stupidity tax, let them sue for it.

As J Paul Getty said, if you owe the bank $100, that's your problem, if you owe the bank $100m, that's the bank's problem. The Pac 12N doesn't have a problem here, Comcast does. Heads should be rolling at Comcast, not the Pac12N.

(01-25-2023 04:25 PM)bryanw1995 Wrote:  

(01-24-2023 05:16 PM)CougarRed Wrote:  The P12N was Larry's baby. He's the one who told ESPN and FOX to screw off, that he would handle it. That the Pac 12 is a Media Company.

The original audit came out in April 2017. The same month, P12N CEO Lydia Murphy-Stephans resigns. Hmmmmm. Sounds like she wanted to come clean, and Larry would not have it. So she quit.

Shuken gets hired in September 2017 and gets made aware of the audit two months later. No way he continues the overbilling without Larry Scott's knowledge and approval.

I'm sure Scott protected himself as best he could in his "separation agreement," but I wonder if this will be the first case of a Conference suing a former commissioner for malfeasance.

Scott knew of this and approved of it, no doubt. However, we are all assuming that the Pac did something wrong here. A better question is, how the heck did Comcast keep overpaying for 5 more years after the audit was conducted? I'd be inclined to call that a stupidity tax, let them sue for it.

As J Paul Getty said, if you owe the bank $100, that's your problem, if you owe the bank $100m, that's the bank's problem. The Pac 12N doesn't have a problem here, Comcast does. Heads should be rolling at Comcast, not the Pac12N.

Naah, Comcast is just going to withhold the money from the last couple of years of the PAC 12 Network contracts.

Not that heads won't roll, but Comcast will get their money back.

(01-25-2023 04:22 PM)Gitanole Wrote:  Jon Wilner, in what is likely the most detailed published report so far, says the situation is becoming clearer. No plausible reason exists to suspect malice or self-dealing on the part of any specific individuals. The overpayment by Comcast to the PAC is a case of 'mismanagement' stemming from conference finance officials lacking access to Comcast's subscriber data and not accounting correctly for that blind spot.

The remedy, meanwhile, seems pretty straightforward: 'Sources believe the [media] company will simply withhold payments totaling $50 million (approximately) over the remaining two years of the carriage contract—about $2 million per school per year.'

https://www.seattletimes.com/sports/uw-h...h-comcast/

This just gets better and better. Pac12N...worst idea ever.

(01-25-2023 04:30 PM)bryanw1995 Wrote:  This just gets better and better. Pac12N...worst idea ever.

Uncovering an error like this can sometimes be a fatal development, and sometimes it means cred in favour of the new management.

Time will tell.

Larry Scott still finding ways to screw over the PAC.

Honestly, I suspect they’re making this revelation public just as an excuse to get rid of the conference network. Which I don’t blame them for in the least.

(01-25-2023 05:37 PM)Poster Wrote:  Honestly, I suspect they’re making this revelation public just as an excuse to get rid of the conference network. Which I don’t blame them for in the least.

Making it public at least gives them that option. But remember, they were going to have to tell the schools they would be getting less so, they needed to get out ahead of it. It's the only way they could blunt the ability of the schools to use it as an excuse for further departures.

(01-25-2023 04:22 PM)Gitanole Wrote:  Jon Wilner, in what is likely the most detailed published report so far, says the situation is becoming clearer. No plausible reason exists to suspect malice or self-dealing on the part of any specific individuals. The overpayment by Comcast to the PAC is a case of 'mismanagement' stemming from conference finance officials lacking access to Comcast's subscriber data and not accounting correctly for that blind spot.

The remedy, meanwhile, seems pretty straightforward: 'Sources believe the [media] company will simply withhold payments totaling $50 million (approximately) over the remaining two years of the carriage contract—about $2 million per school per year.'

https://www.seattletimes.com/sports/uw-h...h-comcast/

Yee-ouch.

(01-25-2023 06:02 PM)JRsec Wrote:  

(01-25-2023 05:37 PM)Poster Wrote:  Honestly, I suspect they’re making this revelation public just as an excuse to get rid of the conference network. Which I don’t blame them for in the least.

Making it public at least gives them that option. But remember, they were going to have to tell the schools they would be getting less so, they needed to get out ahead of it. It's the only way they could blunt the ability of the schools to use it as an excuse for further departures.

While I would be surprised if this was a "stated" reason, it could very well affect decision-making.

(01-25-2023 04:56 PM)Gitanole Wrote:  

(01-25-2023 04:30 PM)bryanw1995 Wrote:  This just gets better and better. Pac12N...worst idea ever.

All realities lead to the same conclusion if you already have it out for the PAC, yeah.

Uncovering an error like this can sometimes amount to a fatal development, and sometimes it can amount to cred in favour of the new management for cleaning house.

Time will tell.

I don't have it out for the Pac at all, I forecast that they'd come in at $30m on their new media rights deal in our poll. It's hard to not notice all the blunders they've made over the past 30+ years though, all of them self-inflicted. Even after the USCLA mess, I actually got into a serious discussion yesterday about whether the Academic Snobs in the Pac would even now accept big 12 schools. That's very eye-opening, and it is concerning as an impartial 3rd party observer that they're not more desperate to sort things out like the big 12 was last year. It's almost like the Academic Snobs are daring the 4c to leave, or the PN4 are holding the rest of the Conference hostage.

But the PACN? That was criticized from many directions on day 1, and in restrospect the thought of the PACN seems to have been at least part of the reason that Scott fumbled away Texas + friends back in 2010. Look at the Conference Networks that have worked well, SECN, BTN, ACCN, they all have prominent media partners or just plain a separate entity of media companies.. The Pac went it alone, with disastrous results.