While the sheer volume of revenue secured in the Pac-12 TV deal is astounding, there's an underrated aspect of the contract that's just as big a coup. The Pac-12 Network was not only a negotiating tactic, it was also an integral part in the record contract. And it may just be the biggest win of all.
The Pac-12 Network will be far more than an afterthought meant to house non-revenue sports and a few minor games. In fact, it's a cornerstone in the deal and has been carefully designed to maximize exposure and profits. Drawing upon the successes and failures of previous conference networks -- namely the Big Ten network and hush-money paid to the SEC -- Scott formulated a plan to create a viable profit-machine in the Pac-12 Network.
A conference network hosting non-revenue sports is unlikely to draw interest from carriers on its own. There's simply no use paying distribution fees for a network few, other than the hardcore, will watch. But a network which features a solid inventory of revenue sports and high-demand programming? Well that just can't be turned down.
Not only did Scott secure $3 billion for the primary television contract, he also has created a second source of sustainable income. The plan is to make the Pac-12 Network widely available in addition to an online component that resembles ESPN3. When Matt Daddy, from SB Nation's Addicted to Quack, and I discussed the media deal six months ago, this was the dream scenario: Make the network widely available and embrace newer forms of media, namely the online market.
But the former, creating a network carried widely throughout the country, could only be accomplished by withholding a significant stable of inventory. And it couldn't just be the leftovers; There had to be premium content on the Pac-12 Network. Essentially, Scott withheld half the inventory of Pac-12 football games, an average of three a week, for the conference network. And he still secured a $3 billion primary contract with ESPN and FOX.
To call it a coup would be an understatement. By keeping the inventory and promising premium programming on the Pac-12 Network, Scott has sent a message: Carry our network or face the backlash of fans. He's forced the hands of carriers.
In addition to the Pac-12 inventory, the conference should also have room to add inventory from others. For a premium price, a conference such as the Mountain West could, in theory, broadcast games on the Pac-12 Network. It's why you see the Pac-12 creating a media entity to go along with the new television deal. Unlike the Big Ten, the Pac-12 will have full ownership over its network, not a minority stake in it. It all adds up to more profit.
The Pac-12 Network could mean even more money in the pockets of the conference and its member institutions. Instead of the $21 million figure being thrown around, it could push $30 million by the time the network is up and running.
This entire media rights deal is a huge win for the Pac-12, with the conference network serving as the proverbial million dollar cherry on top. Scott has quietly sat in waiting, watching other conference's attempt to build their own networks and create another viable revenue stream. He's used the successes and failures of others as a lesson in an effort to put the Pac-12 Network in the best possible position ahead of its launch in 2012.
Many of the opinions here were formulated in discussions with Matt from Addicted to Quack. We've spent countless hours discussing media rights negotiations, the Pac-12 Network and, in the aftermath of the deal, what it means for the conference. I highly suggest checking out his work at Addicted to Quack.