great article about future SEC Network

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There has been lots of media talk about markets and television footprints, but this makes less sense right now for the SEC. Why? Because the games are already nationally distributed on CBS and ESPN. Ratings may well increase now that a team from Texas -- and potentially Missouri -- is in the SEC, but the actual market availability doesn't change. If you wanted to watch the SEC game of the week in St. Louis, you already had CBS. Same with the night game on ESPN in Texas. Now you may watch more if teams from your states are in the conference, but the markets and television footprint argument makes more sense in the cable subscription context. Why? Because when you add a new market you get to increase the amount of subscription fee that you can charge cable operators to carry your network in those states. The more states you have teams in, the more money you make. As an example, the Big Ten Network makes around .90 cents per subscriber in the eight states where its teams are located. What does it make per subscriber in the other 42 states? Try .05 cents.

Given that most of the SEC states view college sports as the primary sporting focus -- unlike the Big Ten where pro sports still dominate -- the SEC per subscriber carriage fees would be higher.

So expanding into Texas and Missouri makes tens of millions -- if not hundreds of millions in the case of Texas -- of dollars and sense using the network model.

The SEC would be able to charge premium carriage rates in eleven states: Florida, Georgia, South Carolina, Mississippi, Alabama, Arkansas, Louisiana, Tennessee, Kentucky, Missouri, and Texas.

Adding Missouri and Texas -- a combined population of 31 million -- would move the SEC's population footprint in its states from 50 million to 81 million.

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Mike Slive and other high-ranking SEC employees told me that the reason the league partnered with CBS and ESPN was because they believed it was less risky than starting their own network. In particular, Slive worried about the battles that might ensue to get cable carriers in the SEC footprint to carry the network. If those cable carriers were particularly difficult, he believed that SEC fans would be furious over not being able to watch their teams play and that fans would blame the SEC for being greedy.

"Estimates by SNL Kagan suggest the network will continue to be a boon for the Big Ten. By 2015, the BTN is projected to generate $333 million."
That's an insane growth rate.

Put simply, the Big Ten Network is kicking arse. And many of the issues that the SEC worried about materializing, haven't. So the Big Ten, which owns 51% of its network with Fox retaining 49%, has blazed the network trail. Mike Slive has told me that he hopes by the time the SEC's television contract comes up for rebid in 12 years that the SEC's own digital network is a competitor with ESPN, CBS, Fox, Comcast/NBC, and which ever other bidders are out there. But what if the SEC created its own actual network too? Wouldn't that strengthen the network's competitive hand even more?

Keep in mind that the SEC retains the copyright to all the archival footage created of its games. Can you imagine how popular an SEC Network would be in the South? Especially the on-demand function? Want to watch any game featuring your favorite team over the past several decades? Pick up the remote. Want to watch an SEC-centric pregame show that doesn't spend time on other conference games? Pick up the remote.

The sky is truly the limit with the SEC Network. (Right now ESPN uses the name SEC Network, but the league is just syndicating programming. There is no actual SEC Network. Indeed, there have been reports that the SEC doesn't have the right to create its own tier three national network under existing contracts. If true expect for that to be revised in renegotiations).

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Mike Slive cares deeply about the SEC's legacy. One of the reasons the SEC has been so successful is because of the equal revenue distribution model. But that model only exists for tier one and tier two rights. What if down the road a Florida or Alabama decided to create its own tier three national network like Texas has done? What if Florida had an individual deal with ESPN and wanted to show state of Florida high school highlights on its network?

You think that wouldn't piss off the rest of the SEC schools?

Slive has told me that the biggest threat to the SEC's future doesn't come from outside the conference, it comes from inside.

The Longhorn Network provided a scary future scenario for the SEC -- what if every big state team in the SEC did what Texas did with its tier three rights, sold their egalitarian soul for the most money it could?

The unique fabric of the SEC would be threatened.

The SEC can make sure a Texas problem never emerges in the league by selling tier three rights. Yep, in essence the SEC can protect itself by making more money.

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