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Could the next Pac-12 rights deal go digital?

The Pac-12 Networks president told Sports Business Journal they’re in exploratory talks with Apple.

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COLLEGE FOOTBALL: JUL 26 Pac-12 Media Day Photo by Chris Williams/Icon Sportswire via Getty Images

The Pac-12’s current television deal with partners ESPN and Fox looked like quite a boon for the conference at the time it was signed in 2011. Since then though, the deal has been revealed to be anything but. Though $3 billion over the life of the 12 year deal from ESPN and Fox sounds like quite a chunk of change, every other Power Five conference has since vaulted it, including the SEC which is increasing the payout from their TV deal to each school by nearly $20 million dollars, just short of what each Pac-12 school makes per year from the contract. Couple that with language in the contract that essentially allows the conference’s TV partners to bury their inventory with not so much as an extra buck flipped their way and you can imagine the conference and their members are anxious for more satisfying terms.

The conference’s television deal doesn’t expire until 2024 but negotiations are already underway. The Pac-12 will, again, be the first conference through the breach on their second mega-deal but they aren’t just talking to ESPN, Fox or even CBS, which recently lost future rights to the SEC game of the week.

They’re also talking to Apple.

Pac-12 Networks president Mark Shuken told Sports Business Journal this week that Apple is “very interested in learning more about the rights and learning more about the business”. He also noted other digital partners are interested but didn’t specify which, among companies like Netflix and Amazon, they’d spoken with.

This is a massive potential game-changer for the Pac-12 and its media rights. Nothing like this has ever been undertaken by any sports entity before, be it another NCAA conference or even a professional league. How this would be structured and how the contact would look, we can’t be sure, but I do know one thing:

The Pac-12 should seriously consider it for a lot of reasons.

No matter the deal the conference signs with traditional, over-the-air or cable partners, they’re likely to always play no better than third or fourth fiddle. ESPN and Fox have deals with every other major conference in the country (Fox even has one with a Group of Five partner!), all of which are currently more desirable eye-ball wise, and will be played at more desirable times, further exacerbating the Pac-12’s exposure issue. The conference knows this, it’s why they were previously open to considering 9 a.m. kickoffs at some point in the future. Regardless of the terms of any new contract with the big broadcast partners, I wouldn’t expect that to change much.

Enter Apple. They have no such other deals meaning a Saturday calendar for the Pac-12 is wide open; they don’t need to compete with the SEC, ACC, Big 12 and Big Ten for time slots. You could all but eliminate the practice of multiple conference games starting by the time East Coast viewers have passed out on their couch. The world is your veritable oyster.

Any deal with a streaming provider, be it Apple or anyone else, would likely mean no games on cable or over-the-air networks ... at all. SBJ reported that Apple is not interested merely in the digital rights; they interested in everything, meaning no sporting events would appear on the channels you’re currently accustomed to. Even in 2020, moving everything to subscriber-only, all digital services is a scary proposition to say the least.

Or is it? Apple TV Plus reports more than 33 million subscribers currently, nearly double that of the Pac-12 Network. The service is also available on numerous streaming devices, like Roku and Fire TV, various types of smart TVs, and every Mac device you can think of. It stands to reason then that as the march towards the expiration of their media deal continues and technology advances, it will likely get easier to find a way to watch. Even if it’s not Apple, Amazon and Netflix have massive subscriber numbers, beyond even that of ESPN or FS1.

Speaking of the Pac-12 Network, I’d expect that any deal with a digital streaming service would also require taking ownership of the flailing channel. Though the idea to wholly own the network seemed good at conception, it has been a massive failure. Allowing your new partner to take over, and also stream the channel on their service 24 hours a day, seven days a week with the hopefully added side effect of sinking some cash into drastically improving the network’s production quality would be a boon.

Which brings us to the heart of the matter: money, of which Apple reportedly has more than $203 billion on hand.

That’s two-hundred-and-three billion, with a B, dollars. On hand. Just ... laying around. Probably under a mattress in Cupertino or something.

Surely, they would never fork over a substantial fraction of that to the Pac-12 and its members. But if live sports content is what Apple desires, they may be willing to pay a hefty price for the first partner willing to take them up on the offer and Lord knows they’ve got the dough to do it. Besides, live sports are what will offer the largest sum of ad revenue moving forward, a case only further hammered home by the cancellation of so many events due to the COVID-19 pandemic. Traditional cable networks are hemorrhaging subscribers across the board as more and more Americans switch to subscriptions a la carte, eschewing dealing with monoliths like Comcast and DirecTV, which isn’t even being actively marketed by their owner, AT&T.

We can all see which way the winds are blowing here. The question is whether it would work and whether the Pac-12, whose financial situation is the most perilous of the Power Five conferences, should be the first to take the leap into yet uncharted water.

To be sure, there would be challenges. Digital streaming services would not work for everyone in the Pac-12’s footprint, especially those without access to high-speed internet. Some fans might not be interested in a streaming service they don’t have or want and there are other barriers of entry, like having compatible devices with which to view the games and Pac-12 Network at all.

There’s also the challenge of your fans having to change their viewing habits. Part of the appeal of live sports is the ability to flop down on to a couch, turn the TV on and ... that’s it. No booting a device up, logging in, having issues with the service, technical or otherwise, and then having to flip back to their cable box if they want to watch something else during breaks or halftime and back, etc. It’s a big change to make.

But I think it’s one the Pac-12 should seriously consider making. Apple would almost certainly make it more worth their while to change, probably in the range of $6-$7 billion over the life of a 10-to-12 year deal (a big guess on my part, to be clear). Though it’s hard to predict where the media consumption market will be in four years, let alone a decade from now, it’s probably not a bad bet that things are moving away from cable subscriptions and towards streaming services. Given that, having one of the largest corporations on planet Earth as your media partner would be a pretty good position to be in.

There is, of course, the chance that this is all a bluff to extract more money from ESPN, Fox or whomever. Those networks know how dangerous a domino the conference would be to fall. Though they surely do not represent a massive monetary priority for the networks, as one goes, more are sure to follow. They have a vested interest in holding on to as many properties as humanly possible.

We’ll all know where this lands in 2023. Much like coach contracts, you never go in to the last year with things unsettled. When the proverbial clock strikes midnight, it’s probably a good bet the Pac-12’s TV rights end up with the maker of your iPhone rather than the platform that brought you (and egregiously cancelled) Stump the Schwab.