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Pac-12 television network falls far short of profit projections

PULLMAN – When the presidents and athletic directors of Pac-12 schools came together to launch the Pac-12 Network, they envisioned a television cash spigot that would flood the athletic budgets of every member school.

Four years into the network’s existence, however, revenues continue to lag far short of expectations. And with other college conference networks distributing more money per school, it appears that the Pac-12 needs a partner to extend its reach into more households to keep pace with its rivals.

The Big Ten Conference and Southeastern Conference (SEC) reach five times as many households, according to some estimates.

Pac-12 executives once thought the Big Ten could be used to model projections. The conference, home to such schools as University of Michigan and Ohio State University, owns 49 percent of its network. The Pac-12, in contrast,owns 100 percent of its network and thus keeps all the profits for its member schools.

“I think conservatively, as we were penciling our stuff out, that we were looking at $5 or $6 million,” WSU athletic director Bill Moos said when asked about the conference’s projections for 2015.

Instead, each member school received $1.4 million. Reports indicate the SEC distributed about $5 million in its first full year of operation. The SEC Network started in 2014. The Big Ten network averaged payouts of $6.6 million per school during its first six years.

The Pac-12 yearly distributes an average of $20.8 million per year to each school thanks to an escalating contract with Fox and ESPN in exchange for the broadcast rights to the most desirable games. However, that figure also falls short of what the Big Ten and SEC are getting.

One remedy the Pac-12 is considering calls for the sale of an equity stake in the Pac-12 Network. This would provide an immediate, one-time influx of cash to each member school and allow their athletic departments to remain competitive while hiring coaches, recruiting student athletes and building sports facilities.

Finding a network partner – such as the SEC’s alliance with ESPN, or the Big Ten Network’s arrangement with Fox – would give the networks more leverage in negotiations.

The Pac-12 has been unable to come to an agreement with DirecTV to distribute its national and regional networks that show games into the roughly 4 million DirecTV homes residing in the conference’s home turf.

“That has been a little bit of a problem, because we haven’t had the hammer on places like DirecTV in regards to, ‘Hey, if you don’t take the networks then you’re not going to get this or that,’ like ESPN and FOX do with the other two conferences,” Moos said.

However, those short-term benefits may not outweigh the long-term advantages to the conference of retaining 100 percent ownership of the network, he said.

“I hold out optimism that ideally, this is just personally my feelings, that we keep the Pac-12 Networks as it is and continue to let it grow,” Moos said. “Because when it does, it’s awfully nice to be getting 100 percent of the profits.”

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