JRsec
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RE: The Fundamental Issue Behind Florida State's Endeavor to Leave and the Second Threat:
(08-14-2023 09:04 PM)Hokie Mark Wrote: (08-14-2023 08:57 PM)JRsec Wrote: (08-14-2023 08:40 PM)Hokie Mark Wrote: (08-14-2023 07:06 PM)JRsec Wrote: ...you are missing the point of a combined network. It cuts overhead and overhead is subtracted before the profits for the networks are split. And it would mean that every state between the ACC and SEC would receive the instate rate, which is higher for both the SEC and ACC schools who have subscriptions in each other's states. Less overhead and higher rates = more money. And with a tiered payout system for the current ACC members the key brands make what they need which kills the impetus for the ACC being raided or dissolving and the added inventory of games between SEC Key brands (think 9 of them) vs (FSU, Clemson, Miami, and to a lesser extent Va Tech) yields a lot more high dollar inventory for the merged conference to sell at the highest value, which in the SEC is about 24 million per game.
I'm working through combining the ACCN and SECN, and I'm not seeing all that much savings, TBH.
Case 1: Shutter the ACCN
Saves lots of costs, but also loses all ACCN revenue (est. $300M to $500M) - especially in overlap states and ACC states where the ACC school would not be joining the SEC.
Case 2: Keep both on air.
Some cost savings, but not all that much - still have to operate 2 studios, 2 sets of on-air employees.
Bottom Line: Somewhat better profits, but likely not game-changing.
Your point #1 is in error. The payout is the from a 50/50 split in the profits after overhead. You lose no subscriptions in just rolling the ACCN subscribers into the SECN. You lose 1/2 of the combined overhead. That is an increase of about 100 million (roughly the annual operating expense of the SECN and the ACCN each.) If you had ACCN subscribers in any of the SEC states, and you know you do, you now earn a $1.50 for every one of those subscribers instead of .25 cents. Likewise, the SEC earns $1.25 for every SECN subscriber in ACC states instead of .50 cents. The outlying subscribers beyond the combined SEC and ACC footprints will still earn the OOC rate. So, you've increased your in-state share through the union of the two networks. If 100 million is saved half of that savings goes to ESPN and half to the schools. If split equally that's 1.62 million each for the 30 schools and Notre Dame. The added subscription rate increase for ACC viewers in SEC states would be the number of those subscribers x $1.25 for the ACC schools and the number of SEC subscribers in ACC states x .75 cents for SEC schools. The combined increases would also be split equally and then ESPN could give us a new rate. Perhaps 1.40 in the combined footprint and .35 cents for those beyond it. ESPN arrived at those figures by averaging the information and weighting the split between the two to yield the highest profit.
Now if the ACC Commissioner, staff, and buildings are also cut, or blended with that of the SEC with cuts to both, the resulting profits from the sale of ACC commercial property would be split between only ACC members.
That Mark is where you pick up money by the merger of the two.
JR, if you roll the ACCN into the SECN, what happens in Florida, Georgia, SC and KY, where fans currently pay for both subs? Do you think they'd charge $2.75 just for the SECN there?
Would those not be offset by adding in state rates in Texas, New York, Pennsylvania, Massachusetts, Alabama, Oklahoma, Missouri, Arkansas, Mississippi, Louisiana, and Tennessee? ESPN would have those numbers. And don't forget, the SECN makes more than the ACCN.
Focusing on the T3 profit margins which won't vary but plus or minus 2 million tops, with 1.62 million of that accounted for by elimination of overhead and you are focusing on the most minor of potentialities. I still believe it would come out ahead both in overhead reduction and in having the combined in footprint rate of all of the states, and I left out Indiana.
We are talking about measure taken to preserve the maximized advertising rates which come from ESPN's holding all of the rights to every school below Virginia and Kentucky and Missouri of note all the way to the Atlantic in East, The Gulf to the South, and the top 3 brands in Texas and Oklahoma which dominate those combined states.
Notre Dame for years has backdoored the Big 10 costing them a little bit on ad rates by providing a cheaper backdoor from which advertisers can reach many Big 10 cities without paying Big 10 rates.
We don't want that in the South or it costs all of us. Merger is the only absolute way to protect it. Remember ESPN holds 100% of the rights to the ACC, SEC, and AAC, and now greater than 50% of the Big 12. Let the Big 10 into that and it costs us all, including ESPN.
(This post was last modified: 08-14-2023 09:29 PM by JRsec.)
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