April 16, 2010

Lucrative Big Ten Network could be driving force for expansion

By Dennis Dodd | CBSSports.com Senior Writer
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CHICAGO -- How much is Woody worth?

How about Bo?

Or Joe?

If you have to ask for last names, then you're not worth your merlot-stocked tailgate in Big Ten country. Buried deep in closets and storage areas of conference schools are potential revenue streams no one would have dreamed of a few years ago.

The Big Ten is looking into expanding its conference, and its network's big reach. (Getty Images)

Silverman is the president of the BTN, one of the driving forces behind what could be the biggest upheaval in college athletics since the NCAA banned the flying wedge about 100 years ago. The network is the first conference-run national cable network. Launched in June 2006, it has become a monster that needs to feed. Translated, that means it needs programming -- programming to lure advertisers, improve the network's cable presence and, oh yeah, fill league coffers.

To get that programming, Silverman will listen to anything. Right now, those coaches shows seem a like a vein of gold that hasn't been mined. Think of those iconic figures on DVD. Think of them sold in a BTN store. Think of them available to download. Think of them as classic TV, restored decades later. Silverman has.

"Do we put it on TV?" said the 46-year-old breathlessly, suddenly in brainstorm mode. "Do you sell it? Do we do both? Do we take clips of it and do something else?"

Whatever the case, next fall you will see those legends on the BTN. It doesn't stop there. Old Rose Bowls, all those Michigan-Ohio State classics. Silverman has hired a firm to digitize all of them. In the end, he says gleefully, "we have a license to monetize all those games."

In other words, get paid for Woody Hayes barking at a co-host in decades-old black-and-white.

Who would watch? Who wouldn't in the fanatical Big Ten? Commissioner Jim Delany said there is a library of 5,000 of those games and shows out there. That would add to the BTN's roll out of some surprisingly high quality productions. The Journey is a regular feature that goes behind the scenes with teams and coaches. Penn State president Graham Spanier, an amateur magician Delany reminds you, has a regular BTN show Expert Opinion.

The network doesn't accept alcohol or tobacco advertising. Instead it is, in Delany's words, "student-athlete centric." In its first three years, the BTN showed 61,000 public service announcements. That's a heck of a lot of free advertising for the Big Ten. While CBS and ESPN get the first choice of the top basketball and football games, the network pretty much has everything else.

Delany's network started humbly, having to go to major cable carriers Time Warner and Comcast to get space on their lineups. It was a long, tedious slog -- a battle that other conferences might not have the stomach for. The Mtn., network of the Mountain West, also launched in 2006 but isn't profitable yet.

"I will tell you it's not a layup," Delany said of his growing start-up. "I don't know what the likelihood of success is but it's not as high as you think. If it was, everybody would be doing it."

It's not the newest thing in college athletics, but it's a powerful thing: Control the message whether it is a network or a coach breaking news on his own ad-supported website. We haven't even gotten into Internet TV which, someday soon, is going to provide another lucrative revenue stream. The Big Ten just happens to have a big, growing network on the cutting edge.

"That sort of brand repetition, that sort of messaging, that sort of ability to tell our own story is unique," Delany said. "Who has it? The NFL Network has it. Major League Baseball has it. Ours is a regional network with national and international reach. Theirs is a national network with not complete reach."

The league joined with News Corp., parent of Fox Broadcasting, in a 20-year deal that could be worth $2.8 billion to the conference. That estimate was made two years ago by Sports Business Journal which included a five-year option in its estimate. Over 25 years, according to the publication, the partnership (51 percent Big Ten, 49 percent News Corp.) could earn the conference $112 million per year, which translates to $10.2 million per school. That's before factoring in other rights holders' deals.

The BTN is available in 73 million homes, which compares favorably to CBS College Sports (89 million) and The Mtn. (30 million). The Big Ten found space in a national historic landmark, a renovated former Montgomery Ward catalog center built in the 19th century on the Chicago River. A full-time staff of 100 may or may not know it is on the bottom floor of college athletics' next revolution.

The network became profitable in December of 2008, which explains why expansion could help the monster. If you don't get it on basic cable, the Big Ten's plan is that you soon will. The economy of success is fairly simple: Expansion folds new markets into the Big Ten eight-state "footprint". Interest from those markets forces local cable carriers to carry the BTN on its basic tier. That's where you get ESPN, CNN, Discover and other networks for "free." (The combined price of those networks is reflected in your cable bill.)

Inside the Big Ten region, you most likely receive the BTN on expanded basic cable. Outside of it, you most likely have to pay extra to see it on a digital sports tier. The ultimate goal is get the BTN on basic cable for everyone.

"Expansion would impact us," Silverman said. "We would have more games -- more games and increased level of games. Having more conference games in general is positive for us. Whether it's a school within the footprint or outside the footprint. Either way, it's going to help us."

Cable television analyst Mike Reynolds of Multichannel News estimated that the Big Ten is getting a subscription fee of 70 cents per month per subscriber within that eight-state Big Ten region. Outside of that area, he says, the fee drops to 10 cents.

Take the state of Missouri as an example of the profit potential for the Big Ten. The state had an estimated 2.2 million households in 2008. Let's assume that almost all of those have satellite or cable or both. If the Big Ten added the University of Missouri, it could potentially increase those subscriber fees from 10 cents per person to 70 cents. That's the difference between a gross of $220,000 and $1.54 million per month.

"You add some of these other players and, yeah, maybe when you come up for renewal the money rolls in, in a much bigger way," Reynolds said.

The schools most often mentioned for expansion are Notre Dame, Missouri, Syracuse, Rutgers and Pittsburgh. Expansion could include any one of those or all five -- or teams that haven't been widely considered yet. If the BTN were able to penetrate the New York City market with the addition of Rutgers or Notre Dame or Syracuse (or all three), a potential windfall awaits -- that 70 cents could be doubled.

"Rutgers was a women's basketball school," said Reynolds, a news editor for Multichannel News. "That seems less important these days ... If, in fact, Big Ten schools are coming to New Brunswick every other year -- Ohio State, Michigan, whoever -- maybe people in New York care more about the Big Ten than they do now."

At this moment, major college athletics is waiting for the Big Ten to make the first move. In December, it released a statement saying it would explore expansion during a 12-18 month period. The timetable, though, seems to have speeded up.

"It's inevitable," Ohio State coach Jim Tressel said of expansion. "It seems to be the way college football is headed right now. I sense that in college athletics, status quo does not last forever. I would expect there would be significant talk about expansion."

What's surprising is the Big Ten historically has been to the right of Ronald Reagan. It had to be dragged kicking and screaming into the BCS 12 years ago. It still enjoys preferential status within the BCS regarding the Rose Bowl. There is a pride in the conference, in its schools, even a Big Ten "attitude" that can best be described as looking down one's nose. Its member institutions are members of AAU, an elite research consortium.

What other sports network would feature President Obama on its air? The BTN will televise the president's commencement speech May 1 at Michigan.

"I know the thing that makes this league work is the history and tradition," Delany said.

That and dust-covered boxes buried deep in closets around the Midwest. How much is Woody worth? We're about to find out.