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November 5, 2010
Texas' Longhorn Network to cash in thanks to ESPN
One of the reasons Texas walked away from an invitation to join the Pac-10 in June was because it would have to relinquish its plans to launch its own network.
That is turning out to be a very smart decision.
According to multiple sources, Texas stands to increase its TV revenue by $12 million per year thanks to an agreement reached with ESPN to distribute the Longhorn Network on cable systems beginning in the fall of 2011.
The sources said the deal is for 10 years and guarantees Texas $12 million annually on top of the TV revenue UT would receive as part of the Big 12's current television contracts with ABC/ESPN and Fox.
Texas is expected to earn roughly $17 million in 2011-12 and $20 million beginning in 2012-13 just from its portion of the Big 12 television money.
Those figures are based on projections for the Big 12's new cable TV package, which is up for bid beginning in April (currently held by Fox), as well as an agreement reached in the summer with ABC/ESPN.
During June's college realignment, ABC/ESPN told the Big 12 it would continue to pay the conference as a 12-team league with a championship game despite the Big 12 losing Nebraska to the Big Ten and Colorado to the Pac-10 and losing its title game beginning in 2011.
ABC/ESPN could have utilized an option that allowed it to cut its payment to the Big 12 by $20 million ($10 million per school) because of Nebraska and Colorado leaving the league. But the television network did not do so.
The new agreement between Texas and ESPN for the Longhorn Network includes a $10 million payment up front, sources said. It also would make Texas the top TV revenue-producing school in the country, earning close to $30 million next year in TV revenue and more than $32 million beginning in 2012-13, sources said.
Schools in the SEC currently earn $17 million per year in TV revenue under 15-year contracts with ABC/ESPN and CBS that began in the fall of 2009. Big Ten schools currently earn roughly $20 million per year from the Big Ten Network in a 20-year contract with operating partner Fox that began in August 2007.
According to sources, Fox had guaranteed Texas $2 million per year to distribute the Longhorn Network to cable systems that included at least 500,000 viewers. Then, ESPN came in and provided a bid six times larger with a viewership that reaches from coast-to-coast, sources said.
Texas athletic director DeLoss Dodds told Orangebloods.com in August he hoped the Longhorn Network would bring the school roughly "$3 million annually with an opportunity for growth depending on its success."
According to sources, Texas has exceeded that goal by four times before even launching the network, which will happen in the fall of 2011, sources said.
Pac-10 commissioner Larry Scott told the Big 12 schools he was courting in June (Texas, Texas Tech, Texas A&M, Oklahoma, Oklahoma State and Colorado) they would receive $20 million in TV revenue as part of a conference network if they went west.
Texas would have had to give up plans for its own network because the conference network proposed by Scott would have required "all rights in," sources said.
Two Big 12 sources told Orangebloods.com Scott's numbers were overly aggressive, and that the TV revenue would have been closer to $18 million per school.
In either case, Texas has the chance to dwarf the numbers it would have earned in the Pac-10 with its anticipated combined haul in Big 12 TV revenue and its new deal with ESPN for the Longhorn Network.
The only thing holding up a formal announcement is a vote of the Texas Board of Regents, which will happen either later this month or in December.
UT officials declined comment.
ESPN vice president of communications Josh Krulewitz told Orangebloods.com on Friday, "We are in discussions with the University of Texas."