Interesting look at Big East, TV ratings, and Fox Sports 1

[admin]

I'm not sure if should be encouraged by the contract we got or dumbfounded based on this:

After taking some time to digest the numbers, my first reaction was: “HOW IN THE WORLD DID THE BIG EAST GET FOX TO PONY UP $500 MILLION?” Pardon my Jae Crowder speak, but the caps were both warranted and necessary. There is absolutely no way you can spin the ratings to legitimize the contract from FOX’s end other than it was desperate for content. It bought a 2009 Chevy Impala for the price of a 2014 Lamborghini Murcielago. Think I’m being dramatic? Keep reading.

http://painttouches.com/2013/06/10/blea ... -sports-1/

[yorost]

Great look? Well, it points out numbers, but it's a terrible analysis, plain and simple. I hardly see a shred of evidence in the article that supports the conclusion that Fox way overpaid on the contract. That's crap, you can't draw a conclusion without making a supporting comparative case. Woe are these numbers I don't bother to consider fully, Fox must be desperate!

There are many variables into the value of a contract, ratings are only one part. What about content covered, expected time aired, recognizable product, stability of conference, investment in your product, etc?. What about placing a fair market value per game aired for each expected rating? To say because ratings don't justify the value, in his mind and with no numbers to justify the statement, that it must be Fox is desperate is incredible laziness. A few months back we read how insiders felt it was odd the Big East never talked to anyone but Fox (condition for the contract) and probably left money on the table as a result. Those insiders must have been the stupid ones.

[admin]

I changed the title thread to "Interesting" which I think it is.

[BillEsq]

Did Fox overpay for the BE? No

Does the BE deserve 500 million? No

How does this add up... because it does not take into account the value of Fox picking up the most lucrative available basketball league and hurting the portfolio of ESPN.

So the math is like this... Real Value of BE + value of Fox picking up the best free agent BBall conference available + damage done to ESPN portfolio + intangible value of publicity of the BE split tied into the Fox Sports 1 roll out = 500 million

lol but i am not the math guy.... Yorost make sure it adds up... probably some law against using that many imaginary numbers in a equation.

[MUSeashells&Balloons]

I read paint touches sometimes and Im glad they are around, but they are some young kids doing a pretty good job considering. But they frequently lack complete perspective when writing their opinion pieces.

[WaitingPatiently]

Once upon a time Fox made what was considered a ridiculous bid out of left field to break the status quo. Shocked, the established networks lost their long-time content. That was the late 80s when CBS/NBC thought they had the NFL on lockdown. Fox was starting a new national network and went for the gold to get into the marketshare. The NFL has never been the same again. It grew to a cash cow/ratings monster. Fox nudged into a national network turning a market of 3 into 4.

Not saying that Fox did the same exact thing with college basketball, or that it'll experience NFL-like growth, but maybe they've found another area the established networks are undervaluing and under utilizing.

[yorost]

Did Fox overpay for the BE? No

Does the BE deserve 500 million? No

How does this add up... because it does not take into account the value of Fox picking up the most lucrative available basketball league and hurting the portfolio of ESPN.

So the math is like this... Real Value of BE + value of Fox picking up the best free agent BBall conference available + damage done to ESPN portfolio + intangible value of publicity of the BE split tied into the Fox Sports 1 roll out = 500 million

lol but i am not the math guy.... Yorost make sure it adds up... probably some law against using that many imaginary numbers in a equation.

Yeah, all of that factors in, the Big East did end up in a good position. However, the longer this has been around and them ore I've seen about it, well, I'm not sure it's as outrageous as people make it out to be. For non-football payout, we appear to still be behind the ACC and B1G per team. I don't have exact numbers, but our deal seems be roughly slotting us around where computers project the quality of the overall conference play.

OK, some very fast and ugly numbers. Let's say Fox really is going to air 100 games on FS1, which I still have a hard time believing despite the reports it might be true. At a $500 million 12 year contract that comes to ~$416,667 per game. Say a game is two hours long then that's ~$208,333 per hour of men's basketball airtime. The average rating, giving each team equal airtime, was .25, which I thinks is ~285,000 households. That means they're paying around 75 cents per hour per household if all of the weight is on regular season men's games. Google suggested ad revenue is 25 to 50 cents per household per hour. If that is even roughly correct, then there you go, ad revenue from regular programming could take a big chunk out of the cost since it appears it will be on the same order of magnitude as that cost. Over 200 hours using the average rating you get $14-$28 million. Yes, the ratings will most likely go down due to losing teams like Louisville and UConn, but this illustrates that ad revenue can take a big chunk out of the cost, I'm not sure anybody knows how ratings will work on FS1. They could be surprisingly good because of lead ins or they could tank due to FS1 not catching on.

Also, Fox has all rights to athletic media, they will be airing and controlling other products. I think we're basically filler material, if they need something we offer a bulk of sports for cheap. They didn't need to sign for all athletic content, that doesn't seem to be the norm. More, ad revenue isn't even clear if it is that important as a means of making money on the deal. If FS1 can be around the suggested 85 million subscriptions, then every penny the Big East increases the monthly subscription (which is around $1 total, I think) of FS1 represents ~$10 million per year. I wish I knew the Big East's influence on the subscription fee. A quarter of a cent and yuck, three pennies and Fox probably has a great deal. Remember Speed to FS1 is about a 75 cent jump, that will cover the cost of all Fox's media contracts.

...so is Fox way overpaying? Given reports that say the Big East probably could have made out better had they shopped around, that the dirty numbers fit the order of magnitude, that we aren't likely out pacing the best basketball conferences' non-football deals, and that there are so many other factors unaccounted for, I'm leaning towards saying Fox wasn't so stupid, Maybe they could have low balled the Big East in a different scenario and made more money, but I'm guessing they financially justified the purchase.

[BillEsq]

and thats why i'm not the math major of the group . Honestly it was a good decision by fox win a little or lose a little it will accomplish what they want and they make a bigger splash then offering a media deal to the NEC.

[billyjack]

Guys.
Our schools control New York City, Philly, Chicago and Washington. They belong to the Big East. Syracuse fans have hoodwinked the ACC and everyone in their entourage into thinking they own NYC, but it's not the case. Pitt is nowhere near Nyc and will lose recruits and interest to the Big East going forward, similar to West Virginia. Does NYC miss West Virginia? I would say no.