CBS has first priority for the SEC Game of the Week in the Fall, but will not be able to keep these television rights.
CBS holds expiring television rights that are fading in value with every year, month, week, day or minute that passes. The SEC on CBS Football package has been a mainstay for the Tiffany Network for two decades and even has a theme music that has become associated with Saturdays in the Fall for those in the South. With the Southeastern Conference’s strong relationship with ESPN and the Worldwide Leader in Sports’ desire to empty their coffers at Sports Television Rights, it is extremely likely that CBS Sports’ future with the SEC will end. CBS is in a situation much like a small market Major League Baseball team with a lower budget for salaries and a mega-star Center Fielder with two years left on his contract who came up through their farm system. CBS needs to take action and not be a sucker, the way they accomplish this is by not letting this contract go all the way to expiration.
Evaluating CBS and CBS Sports properties
CBS offers a wide array of weekend sports programming. CBS has an NFL contract that gives them the rights to Sunday Afternoon Football, five Thursday Night Football games and a Super Bowl every three years (alternating with NBC and Fox).
CBS has their current agreement with the Armed Forces to air their Football games on CBS or CBS Sports Network, which happen to give them the ability to air Notre Dame Football games. CBS has the rights to air SEC College Football games, which happen to include the first choice of games available for every weekend from Week 3 onward and a pair of doubleheaders during the season. During a doubleheader weekend, CBS has the first and third pick of the games available that weekend. One of the doubleheader weekends may feature a night game and the other doubleheader weekend must feature an earlier game. CBS has the rights to the Friday Afternoon game after Thanksgiving, which is now occupied by the Arkansas-Missouri rivalry. CBS is also the broadcast home of the SEC Championship Game, which to those in the South is the National Championship Game. Not to be forgotten in CBS’ College Football portfolio is the Sun Bowl, which has fallen in prominence over the years.
CBS has rights to the PGA Tour including coverage of The Masters and PGA Championship, which should not be forgotten. CBS also has aired Primetime Boxing through its subsidiary, Showtime Networks.
Possibly CBS’ biggest calling card in sports programming is coverage of the Men’s Basketball NCAA Tournament. CBS and Turner possess the rights to air March Madness while ESPN covers the Women’s Basketball NCAA Tournament, which is significant, but not significant when it comes to ratings. ESPN also airs the NIT, which is not exactly a ratings winner either outside of the fanbases watching the game and those that have placed wagers. Tony Williams, 5Dimes.eu General Manager, probably likes the NIT far more than most fans.
CBS does air Men’s Basketball games on the weekends after the SEC Football Championship Game. These afternoon games feature programs from Power Conferences (SEC, ACC, Big Ten, Big XII, Pac-12, American, Big East) and are either aired in doubleheader format or have individual afternoon games on both Saturday and Sunday.
CBS Sports Network, formerly known as College Sports Television (CSTV) offers CBS Sports programming 24/7/365. The programming ranges from live events to garden variety sports opinion shows. CBS Sports does fall into the same lack of programming trap that rivals Fox Sports 1 and NBC Sports Network encounter due to not having enough live sports television rights compared to ESPN.
CBS Sports Network has College Football airing rights to Conference USA, Mountain West Conference, American Athletic Conference (sublicensed from ESPN), MAC (sublicensed from ESPN), Army, Navy and the Cure Bowl.
CBS Sports Network has College Basketball airing rights as well including coverage of Atlantic 10, American Athletic Conference (sublicensed from ESPN), Big East (sublicensed from Fox Sports), Conference USA, MAC (sublicensed from ESPN), Missouri Valley Conference (sublicensed from ESPN) and a few non-conference tournaments.
Major League Lacrosse, College Hockey, World of Outlaws, ARCA Racing, Minor League Baseball, and Professional Bullriding for the most part complete the CBS Sports Network live schedule.
According to What You Pay for Sports, CBS Sports Network is in approximately 60 Million Homes and has a carriage fee of $.26 per subscriber. CBS Sports Network is believed to generate $187 Million in annual revenue.
Gunshy Because of the mtn.?
CBS Sports Network has enjoyed a long standing relationship with the Mountain West Conference, in fact, before the Big Ten Network, SEC Network, Pac-12 Networks and Longhorn Network there was a network devoted to this conference. CBS owned 40% of the network while Comcast and the Mountain West Conference evenly split the rest of the ownership. The network was called the MountainWest Sports Network or as many called it the mtn. (The Mountain). One of the major challenges was getting the network accepted by cable companies located in the footprint of the member institutions.
The other challenge that many may not realize is that back in 2006, though the MountainWest Sports Network was picked up by some major cable companies, the region had many more independent cable companies than other regions. The independent cable companies had a significant amount of customers that they served when considering the network’s expected footprint, which was comprised of areas with smaller populations. Each small cable operator was far more significant than previously thought, which made the process rather agonizing.
Conference realignment and a lesser significance granted to the network eventually led to the network’s closure on June 1, 2012.
CBS’ SEC Football Rights and Payments
CBS currently pays $55 Million per year to the Southeastern Conference per year for live television rights to the biggest SEC Football Game of the Week and the SEC Championship Game. This is a significant bargaining chip and it is significantly under-priced considering that the network has been paying this price since 2008. The actual value of these rights is much higher than the entirety of the SEC Network’s programming, but the value will decrease as this contract is a depreciating asset. CBS contract is set to expire after the 2023 Football Season.
A CBS spokesperson said the following in an e-mail to Outkick the Coverage:
“The SEC is a cornerstone of our fall programming schedule. We will be broadcasting the SEC Game of the Week for the next 10 seasons and we have every intention of renewing these rights when they expire after the 2023 season.”
CBS has eight more seasons left on the contract and is a lame duck in the wake of ESPN’s close partnership with the SEC established on May 2, 2013.
What if CBS sits on the live television rights until expiration?
It’s a major gamble for them. A gamble that is not in the DNA of the network. It leaves open a very high likelihood of being shut out of College Football season and even though there are contracts with the Pac-12 set to expire and a struggling Pac-12 Networks, CBS does not seem intent to revisit the West Coast and Intermountain West with a standalone network.
CBS has to be proactive in order to remain relevant against ESPN, Fox Sports and NBC. ESPN has the Longhorn Network and SEC Network. Fox Sports has the Big Ten Network and rights to Big East Athletics. NBC has rights to Notre Dame Football games in South Bend along with NASCAR (Nationwide and Sprint Cup Series) and English Premier League to occupy time slots in the Fall. NBC and NBC Sports Network are able to make up for shortcomings after Thanksgiving by airing Atlantic 10 Basketball, CAA Basketball, NHL, Rugby and Olympics coverage (2018, 2022, 2026). NBC is not much of a threat here to CBS, but CBS has to do something because everyone else has programming or partial programming. CBS cannot put Mountain West Conference, American Athletic Conference or Navy/Army Football games as an alternative in 2024, this is a ratings killer.
Why is the ACC is the right fit for CBS Sports?
New York Matters
CBS is the network that best understands the ACC footprint and would be the perfect fit for a conference that really wants to be in New York. CBS Sports is New York-centric as far as geography is concerned. CBS Sports’ main offices are in Manhattan, same with the CBS Corporation. CBS Sports Network has been taping in Chelsea Piers for at least a decade. CBS does not have to build or buy a brand new studio elsewhere, they can just re-purpose their existing studios and have the graphics display ACC insignia. It’s a cost-effective move in this regard.
ESPN is headquartered in Bristol, Connecticut and that is at least a two hour drive away from Penn Station (who would be out of their mind to drive into Manhattan from Connecticut anyway?). Bristol is in the Hartford Metropolitan Area and ESPN would prefer that viewers not think about that. ESPN has studios in Charlotte, Austin and Los Angeles along with beat reporters in every metropolitan area. The Worldwide Leader maintains offices in Manhattan for Finance, Operations, Marketing, Publishing and Executive Management. However, The Mothership is in Bristol.
Fox Sports’ main studio is in Los Angeles, but they maintain notable studios in Charlotte (for NASCAR) and a smaller office in New York. Katie Nolan is the only notable personality that has a show that takes place in New York and she has a late night 1/2 hour show.
Core Competencies and the Lead Up to the Postseason
ESPN is the exclusive home of the College Football Playoff and it costs $610 Million per year for this right through the 2026 Bowl Season and College Football Playoff (January 2026). CBS/Turner have the exclusive rights to March Madness through 2032. CBS’ Road to the Final Four does not have to start on a Selection Show that runs too long and halfway through has been completely leaked.
CBS re-introducing themselves in March after seemingly being hidden away on CBS Sports Network combined with a less-than-predictable regular season schedule on CBS is a shocking change in tenor compared to the familiarity of ESPN. After all, ESPN has a firm hold on thousands of College Basketball games and is a default sports network for most.
The ACC is considered the Gold Standard in College Basketball as far as tradition, passion and championships. The ACC schools located south of the North Carolina/South Carolina Border may not value College Basketball as much, but the rest of the conference more than compensates for it. Interest in the ACC through CBS properties including an ACC Network will create an alternative in College Basketball media that is both taken seriously and provides build-up to March Madness.
Money, Money, Money, Money, Money
Compare the ACC and SEC Footprint, one can see it with their eyes. It’s rather obvious. The SEC Footprint is comprised of poorer states and ACC is comprised of wealthier states. There are more markets in the ACC Footprint than the SEC Footprint. It is important to compare the two conferences as CBS is hypothetically selling the SEC television rights in exchange for the ACC. The two conferences are different demographically and there are opportunities/drawbacks in pursuing the ACC. The SEC Network has been very successful and the ACC Network should be very successful as well, but the strategy would have to be different to make it work.
Major metropolitan areas in the SEC Footprint:
- San Antonio, Texas
- Dallas, Texas
- Houston, Texas
- New Orleans, Louisiana
- Birmingham, Alabama
- Baton Rouge, Louisiana
- Jacksonville, Florida
- Orlando, Florida
- Miami, Florida
- Tampa, Florida
- Atlanta, Georgia
- Charlotte, North Carolina
- Memphis, Tennessee
- Nashville, Tennessee
- Louisville, Kentucky
- St. Louis, Missouri
- Kansas City, Missouri
- Boston, Massachusetts
- New York, New York
- Buffalo, New York
- Pittsburgh, Pennsylvania
- Philadelphia, Pennsylvania
- Washington, District of Columbia
- Richmond, Virginia
- Hampton Roads, Virginia
- Raleigh-Durham, North Carolina
- Charlotte, North Carolina
- Atlanta, Georgia
- Orlando, Florida
- Jacksonville, Florida
- Miami, Florida
- Indianapolis, Indiana
- Chicago, Illinois
- Louisville, Kentucky
- Baltimore, Maryland
ACC and SEC alumni have much different earning power. It makes the case for CBS to drop the SEC and pick up the ACC with a different approach as far as advertisers are concerned.
ACC Schools by Salary of Alumni (Payscale.com – Bachelor’s Degrees Only)
SEC Schools by Salary of Alumni (Payscale.com – Bachelor’s Degrees Only)
ACC Alumni on average (mean) earn 10% more than SEC Alumni with ten years or more of work experience. ACC Alumni with 0-5 years of experience earn 8.7% more than SEC Alumni in the same range of work experience.
ACC Alumni encompass a larger percentage of the overall fanbase, although alumni are technically not fans since they did attend the institution, thus making them fans of themselves. It is always nice to be a fan of oneself, but there is a distinction as fans are always on the outside of the institution and alumni are in some way always on the inside.
According to SBNation, taking the mean of the alumni and students as a percentage of total supporters per program, alumni are 18% of the supporters in the ACC and in the SEC this figure is 16%. The mean is significantly impacted by outliers in the SEC.
The obvious outlier is Texas A&M, a school that is predominantly supported on Facebook (which is where the SBNation study sourced their data) by alumni. Removing Texas A&M from the list brought down the figure to 13%. The median for the SEC is actually 11%.
The ACC is a bit of a different story than the SEC.
Only three schools enjoy a single digit alumni to supporter percentage: Duke, UNC and Notre Dame. Many people support Duke, UNC and Notre Dame without any affiliation to the schools and many of these fans may have never even stepped foot in the States of North Carolina and Indiana. In the ACC, support is more alumni-centric, they earn more money and live in wealthier states.
The SEC enjoys the advantage of being disproportionately composed of public institutions. Thirteen of the fourteen member schools are public institutions and ten of the fourteen schools serve as flagship institutions for their respective states. It is both a blessing and a curse as these public institutions aim to serve their states and unfortunately reflect the educational and affluence issues that plague them. The standards may be lower, but the bar is sadly too high for many and the hierarchical structures become very evident. Wealthy students and alumni typically cluster in the secret societies and Greek Letter organizations for the purposes of power, networking, wealth preservation and organized courtship (possibly the nicest way to put it). Ordinary students and alumni are on the outside looking in, but maintain an ascendant outlook even in times of economic peril for an entire generation. However, the ordinary students and alumni regardless of their choice to cluster into the secret societies and Greek Letter organizations often do rather well for themselves. The clear outsiders are the general public that pull for the Football team as this is their only reason to care about the existence of the academic and research institution. The outsiders in the general public are comprised of those that attended a different university or lack any post-secondary educational ties, there are affluent outsiders, but the vast majority in the SEC states fit well with the economic status illustrated by the median household income in their respective states or cities.
The ACC is composed much differently as it is comprised of six private institutions, eight public institutions and one hybrid public-private institution. Only two ACC schools are flagship public schools and are from states with more high-quality post-secondary academic options than the SEC.
One can conclude that the lower enrollment at the ACC institutions would indicate a lower number of living alumni. These numbers would seem to discourage a network like CBS from pursuing the ACC, but it is hard to ignore the major selling points for the conference from a network perspective. The ACC’s weakness of lower enrollment and smaller support bases compared to the SEC combined with a wealthier target audience in wealthier states means that the ACC Network can not only charge more for advertising due to the geography, but also can attract advertisers that target a more affluent market. Niche advertising as opposed to the typical College Football mass audience approach. Better segmentation and more affluence goes hand-in-hand with higher advertising rates. The need for a mass audience approach for CBS and the ACC Network does not exist since the vast majority of the schools are not flagship public institutions.
Poorly targeted advertising and promotions can be problematic for College Sports. The ACC Network and CBS would have a better pitch than the status quo.
There Aren’t Any Strong Alternatives
With the SEC Network and Big Ten Network already claimed by major media along with The Longhorn Network, the ONLY opportunity for a conference network with significant carriage is the ACC Network. Pac-12 Networks has been a bit of a disaster as it has been hyper-regionalized to the point where there is confusion. The network is owned solely by the Pac-12 Network, but the network shares a studio building with Comcast Sports Net Bay Area in San Francisco.
The Big XII’s future is rather uncertain and does not offer a geographic footprint that is appealing outside of Texas and Oklahoma. The Longhorn Network complicates matters further as far as any Big XII Network being created. The Longhorn Network has lost $48 million over the first five years of the networks existence.
Selling the Lucrative SEC Football Rights to ESPN at a high markup is SMART.
CBS Sports can be stubborn and believe that the SEC will stick around with CBS, which they will not OR they can sell now and use this revenue to offset the costs of the ACC Network and exclusive ACC television rights. SEC Television Rights as a whole cost ESPN $217 Million and this is without the biggest SEC Game of the Week and the SEC Championship Game. The SEC makes their money in the Fall from Football, all else is just a bonus. The SEC is much like retail stores that make their profits in the 4th Quarter of the Calendar Year (for most it is their Fiscal Year). The SEC Network generated $576 Million in subscriber revenue in 2015. The subscribers would not be there if it was not for bundle packages and Football.
CBS pays $55 Million a year and could easily sell now to ESPN for three times that much, which sounds ridiculous, but CBS’ package is the Boardwalk to ESPN’s Park Place and existing monopoly consisting of Pennsylvania Avenue, North Carolina Avenue and Pacific Avenue. No longer would ESPN have to uncomfortably promote a game that is not even on their network nor acknowledge that the most significant rivalries and the Championship Game can only be shown on tape delay.
At $1.32 Billion for the next eight years, would ESPN jump at the chance to own the monopoly over the SEC? Absolutely. Live College Football on the SEC Network jumps in quality immediately and justifies a higher carriage fee and higher ad buy rates on the SEC Network. It could even be an agreement that directly swaps rights and involves the ACC where no money changes hands.
CBS should have the cash on hand to create the ACC Network and split the network ownership 50/50 with the conference just like ESPN does with the SEC. CBS would have the Game of the Week in Football and the most watched games of the year in College Basketball. CBS could show as many as four Notre Dame games and have the network that is the exclusive home of the Duke-North Carolina rivalry. With more predictable scheduling, ACC Basketball can take on the same sort of effect as SEC Football with their audience.
If CBS wants to defray costs and partner with another network, the relationship with Turner seems to going very well for NCAA Tournament coverage. TNT can air ACC Basketball games and promote them during regular season NBA games as part of CBS/Turner’s Road to the Final Four. Charles Barkley, Kenny Smith, Shaquille O’Neal and Ernie Johnson covering College Basketball all season long is a rather good proposition.
The SEC Network and Big Ten Network set a standard as far as carriage costs are concerned within the footprint as the ACC Network would be a Regional Sports Network that could logically charge $1.25 to $1.50 per month in subscriber fees. The ACC Network will have higher advertising rates than the SEC Network, which should make this a big winner not only for member institutions, but for CBS as well. It is very possible that the ACC Network would eclipse the Big Ten Network in revenue generated.
CBS has to accept that their television rights are going to change and these rights are depreciating in value. CBS has to eventually replace lucrative programming in the Fall and not doing anything to address this will leave them out in the cold. Selling or exchanging their SEC Football television rights to get the exclusive rights to ACC programming secures the network a strong future in the College Sports Media landscape. CBS is the best equipped media company to serve the ACC in terms of geography, programming portfolio and tradition. CBS can recognize there are greater, more targeted advertising opportunities that make the ACC audience distinct.