About one month before its long-awaited launch, ACC Network is the focus of huge questions, big money (2024)

Five weeks before launch, this ACC Network stuff is getting serious.

Coaching heavyweights Mike Krzyzewski, Dabo Swinney and Roy Williams all recently joined the fray, sometimes as pitchmen, sometimes with other commitments.

ESPN, the ACC’s longtime TV partner and the worldwide sports leader expected to make sure this new channel becomes a success story, accelerated its banner advertisem*nts at ESPN.com and other promotional materials last month, as important talks continued with cable outlets, satellite companies and other distributors.

ACC presidents and chancellors, who rarely need more than occasional updates (if any) on the overwhelming majority of athletic department matters, originally received bulletins on the ACC Network only annually. Now those occur every two weeks.

Everyone’s main message is the same: If you really care about ACC sports, you must demand — right now —the ACC Network from your TV provider. Dozens of outlets already have agreed to carry it, but some key companies are not yet on board.

The channel launches Aug. 22, and there will be an avalanche of exclusive content, including high-profile conference matchups in football (starting with Georgia Tech at 2018 national champion Clemson on Aug. 29) and men’s basketball (starting Nov. 5-6 and including 2019 national champion Virginia’s trip to Syracuse).

In Williams’ personal pitch on UNC’s website and the Tar Heels’ basketball Twitter page, he specifically mentions his team’s season-opening matchup against Notre Dame in Chapel Hill on Nov. 6. It will be carried exclusively on the ACC Network.

“Don’t miss the action when the ACC Network goes live in August,” Williams said. “Check GetACCN.com to see if your cable provider is carrying the ACC Network. If not, contact your cable provider and let them know you don’t want to miss a single Tar Heel basket.”

Coach Williams is excited about the launch of the @ACCNetwork this fall! Go to https://t.co/CuAom3aieb to see if your TV provider will carry the network in time to see our home opener vs. Notre Dame. If not, contact them to demand they carry the ACC Network.#GoHeels pic.twitter.com/5cM5oOixzi

— Carolina Basketball (@UNC_Basketball) June 18, 2019

Meanwhile, the multi-time national championship programs of Krzyzewski (five NCAA titles at Duke) and Swinney (two College Football Playoff titles with Clemson) will be profiled as part of the ACC Network’s original features and documentaries, even as their teams serve as powerful, long-term, live-sports magnets for the new channel.

An evening with Coach K and some of the best in @DukeMBB history 😈

"The Class That Saved Coach K" debuts Aug. 22 on the ACC Network‼️#DukeTakeover | #GoDuke pic.twitter.com/0sUbmwzOZ1

— ACC Network (@accnetwork) July 3, 2019

The four-part series "All In: The Clemson Football Family" is coming to @accnetwork on Aug. 25!

Don't wait until August to check https://t.co/FdiW63c34o to see if your provider is carrying ACC Network — call to demand ACC Network now.https://t.co/nhi9dKmqD0 pic.twitter.com/tqjUZvJai4

— Clemson Football (@ClemsonFB) June 19, 2019

Will ACC fans be OK missing all of those games, all of that original/exclusive ACC Network programming? That’s a passion question, and it’s a hugely important one.

ESPN analyst Tony Barnhart, nicknamed Mister College Football (twitter handle: @MrCFB) long ago, has been covering the sport since the 1970s, even before it exploded as a national TV commodity. More recently, he’s seen the arrivals of the Big Ten Network, SEC Network (he works there), Pac-12 Network and more.

“If people in Big Ten country can’t get their network, they write an email or make a call, maybe even an angry call,” Barnhart said. “The SEC has a lot more fans who, if they can’t get their network, they’ll threaten to burn somebody’s house down.”

Wake Forest athletic director John Currie, whose first official day leading the Demon Deacons was May 1, knows the ACC Network story as an insider and an outsider. Nowadays he gets the biweekly updates with all of his president/AD colleagues, and he’s bullish on the channel’s future, but three years ago, when he first learned the ACC Network was becoming a reality, he heard plenty of skeptics.

“I was in the Big 12,” said Currie, then the Kansas State AD. “People were asking: Is the ACC Network going to work? Are they going to be able to get there? Have they missed their time?”

Three years later, many in college athletics and still others in the declining pay-TV industry continue to ask variations of those questions.

ACC officials, however, remain universally optimistic, even as there’s some anxiety about carriage deals, revenue projections and other big-business matters.

Virginia Tech AD Whit Babco*ck answered the late-timing question best.

“I’d rather be the last one in the door at a great party,” Babco*ck said, “than the one who shows up early to the wrong party.”

Why is this so important?

Conference-specific channels, when executed with aplomb, have been enormous moneymakers, truly one of the most impactful new difference-makers financially in all of college athletics. This is entirely a 21st-century phenomenon, with some traditionally powerful leagues surging and others being left behind.

Just ask the Big Ten or the SEC. They have been among the top conferences in America competitively and financially for more than a half-century, but they have set themselves apart as economic engines only recently, in large part because of the overwhelming success of the Big Ten Network (2007 launch; eventual profitability) and the SEC Network (2014 launch; almost immediate profitability).

“(The ACC Network) has to be successful,” Clemson AD Dan Radakovich told The Athletic recently, “for us to continue to have the resources to compete with other programs in other conferences.”

While it’s impossible to make true apples-to-apples comparisons for a variety of reasons (quickly changing TV landscape, industry analysts’ publicly stated numbers conflicting with conference and network claims, subscriber data that can shift significantly even monthly, etc.), the blunt-instrument round numbers portray a stunning picture.

* Estimates from SNL Kagan, industry analysts, ACC/ESPN/The Athleticsources
** 20 million+ already; expected/projected to be 30M-50M by (or soon after) launch
^ Number does not include/measure annual profit, expenses, ad revenue, etc.
NOTE 1: There’s no “Big 12 Network”; members have collective and individual TV deals.
NOTE 2: Average price numbers can change quickly/dramatically with carrier changes.

Again, these numbers lack anything close to scalpel-like precision, but they combine to paint a bird’s-eye view in which, especially over a period of years, the monetary disparities among the Power 5 conferences are becoming canyonesque.

Peeking down the road a bit, consider the repercussions. Things always can (and will) change, of course, but over a decade those numbers would mean more than $2.3 billion (after ESPN takes its half) in “new” subscription revenue for the SEC, more than $1.6 billion (after Fox takes its half) for the Big Ten, about $400 million for the Pac-12 (which doesn’t have a similar arrangement with a TV partner) and … zero, at least with this branch of the TV money tree, for the ACC (until now) and the Big 12.

Remember, too, that these numbers represent only subscription revenue. They do not include sponsorship/advertising dollars, another megamillion pot of gold. Of course, they don’t include expenses, either, which typically are massive at the start.

According to the ACC’s most recently available tax returns, its total revenue was almost $465 million in 2017-18, and the average payout for the league’s 14 full members was almost $30 million. Oddly, that was both good news and bad news.

The good: In just five years, that important total revenue number had doubled. (In 2012-13, it was about $232 million.) The per-school payout keeps growing, too.

So what could possibly be bad about doubling your revenue over a five-year period? Well, all things being relative, the ACC continued to fall behind other leagues, especially the Big Ten and the SEC, in some very important categories.

By far, the most rapidly changing line item on conference spreadsheets in recent decades has been television revenue.

Of the ACC’s $465 million in shared money from 2017-18, more than $277 million (almost 60 percent) came from its own TV contracts. In addition, $56.6 million (12 percent) came from the NCAA via the NCAA Men’s Basketball Tournament, meaning it was essentially the ACC’s 2018 portion of the long-term, multibillion-dollar March Madness deal between CBS/Turner and the NCAA. The league’s annual bowl money (e.g., $67.1 million just from the 2017 College Football Playoff payout) derives mainly from TV contracts between the various bowls and networks, too.

Over the past five years especially, and for the Big Ten and SEC in particular, the “we’re-printing-money-with-our-new-channel” subsection of the broader TV cash category has been turning the college sports world upside-down.

Indeed, after decades of often leading the nation in financial payout per school in any given year, the ACC’s number in recent times typically has fallen to third, fourth or even fifth among college conferences. Again, the Big Ten and SEC are leading the way.

According to multiple sources, ACC presidents and athletic directors have been told to expect a Year 1 bump of $4 million to $5 million per school because of their new channel. That number is projected to rise gradually to $10 million to $15 million in later years, after various startup costs have passed and “full distribution” on more carriers becomes more likely.

So, the almost-here ACC Network certainly will improve the league’s financial numbers, and perhaps its place in that portion of the conference pecking order.

“It will close the (financial) gap to some degree,” said Duke athletic director Kevin White, chairman of the ACC’s Television Committee. “But it’s always hard to say exactly how this will play out.”

Who will carry this new channel?

Starting with their ACC Network announcement in July 2016, ACC and ESPN officials are only three years into an initial, longer-term plan to maximize distribution.

At this point, so close to launch, ACC officials will excitedly announce new partnerships (see chart), of course, but they won’t say a word about carriage numbers or details. In fact, they’re so deferential to ESPN (which handles all negotiations) on those specifics — likely reflecting the sensitive nature of ongoing talks — that they won’t even confirm some numbers (e.g., a cable outlet’s number of customers) that are publicly available and/or confirmed, on the record, by the companies themselves.

With that nuclear-code-level secrecy as the backdrop, White described the ACC Network’s partnership with ESPN as “priceless,” and some of the positive early returns (gleaned from multiple sources outside the ACC’s headquarters) back that up.

The ACC Network’s existing base (reflecting only publicly announced deals) of an estimated 20 million subscribers — that’s now, more than a month before launch — is well above the industry standard. More big news is expected to be shared shortly.

“We have great momentum with the ACC Network,” said Sean Breen, senior vice president of affiliate sales for Disney and ESPN Media Networks. “We’ve hit our stride in the marketplace, and we’ll have more (carriage) announcements coming soon.”

According to multiple sources, the channel is expected to debut with 30 million-50 million subscribers, on more than 75 carriers nationally. Again, those numbers are better than almost all of the most similar ventures that came before it.

* Many other/smaller providers (not listed) also have agreed to carry the ACC Network
** Estimated number of households
NOTE 1: In most cases, not every carrier customer = subscriber to a specific channel.
NOTE 2: Numbers for internet-based companies include only live-TV subscribers.

For now, there remain some major holdouts, including the two largest cable companies and five of the top nine providers overall, but that’s actually the industry standard. (See more in the section below on the ACC Network’s numbers more than a month before launch compared with others on that same timetable.) Even the Big Ten Network and the SEC Network faced similar hurdles in their early stages.

“We all want these bigger contracts signed early, but they only rarely happen that way,” UNC athletic director Bubba Cunningham said. “Sometimes they go down to the last minute. Only when the providers become afraid they’re going to lose large numbers of their customers do you see more of these bigger deals getting done.”

For tactical reasons, ESPN officials wanted significant separation between the very successful 2014 launch of the SEC Network (another ESPN partnership) and the official debut of the ACC Network. The ensuing five-year gap allowed the carriage negotiators from ESPN to use their massive leverage each time one of their cable, satellite or other long-term distribution partners came up for renewal.

“(ESPN) picked 2019 for a reason,” Babco*ck said. “They are a worldwide industry leader, obviously. They do business at the very highest level. This was strategic. Their distribution deals with their biggest partners were coming up over a period of years.

“So, in this (ACC Network) case, patience was warranted. That patience is paying off, as you’ll see with our early distribution numbers, and we’re thrilled to be doing business with the best in the business.”

The Walt Disney Co., remember, is the parent company of ESPN and omnipresent in the TV world. Its holdings (sometimes in partnerships with others) there include ABC, the ACC Network, A&E, the Disney Channel, more than a dozen ESPN-branded properties, FX Networks, the History Channel, Lifetime, the Longhorn Network, National Geographic TV, the SEC Network and their many derivatives.

A&E, ESPN and the History Channel are three of the 10 most-watched cable networks, giving Disney almost Herculean power to go with its Rafiki-style wisdom and experience in its negotiations with carriers.

“Clearly, ESPN brings tremendous leverage to the distribution table,” ACC commissioner John Swofford said. “That’s one of the many reasons, one of the biggest reasons, we’ve been so optimistic about the ACC Network from the start.”

Among sports outlets, ESPN is such a one-of-a-kind, Mulan-like force that it has led to both by far the category’s highest carriage fees (a reported average of $7-$8 per subscriber per month just for the main ESPN channel) in the United States and the greatest distribution (86 million TV households) nationally.

Keep in mind: A large majority of cable sports channels receive less (some much less) than 50 cents per month per subscriber on average. Think Golf Channel, NHL Network, NBC Sports Network, CBS Sports Network, NBA TV, MLB Network, Tennis Channel, FS2, etc., plus the Big Ten Network and the Pac-12 Network.

ESPN has three of the five current exceptions to that “50-cent ceiling” for sports programming on cable: ESPN, ESPN2 and the SEC Network. (The NFL Network and FS1 are the other two examples, with the NFL Network slightly above the $1 per subscriber per month mark right now and FS1 slightly below it.) Again, ESPN alone is getting about six times as much as the second-most valuable sports cable channel.

Thus, thanks to a combination of that multichannel popularity and good old-fashioned leverage, whenever the Disney folks exit negotiations, their most popular sports offerings — ESPN (86 million TV households), ESPN2 (86 million), ESPNU (64 million) and the SEC Network (59 million) — tend to remain industry leaders in terms of both price points and carriage numbers. The ACC Network hopes to join that club.

Moreover, since Disney is the majority owner of Hulu, a fast-growing streaming service that added a live-TV option (at a higher cost) in 2017, discussions about Hulu carrying the ACC Network were truly simple. Hulu wanted additional live sports content, the ACC needed more distribution partners, and Disney was the happy intermediary and mutual beneficiary while keeping everything “in the family.”

While only an estimated 2 million or so of Hulu’s 28 million subscribers now have the live-TV option, the relationship is viewed as especially valuable, given modern cord-cutting and cord-shaving trends.

“In this rapidly changing TV world, it was comforting to hear the ESPN folks explain that,” one ACC athletic director said. “Yes, millions of people already have moved away from cable and satellite television, for example. But if you want ESPN, or the ACC Network, or anything else, you’re still paying roughly the same monthly subscriber fee for that channel whether you’re getting it through cable, satellite, fiber, internet TV or any other distribution method that may be coming down the road next.”

ESPN’s 86 million subscribers, after all, are down from the network’s 100 million-plus peak in 2011. In that same eight-year stretch, though, ACC Network partner Verizon Fios has added subscribers to its fiber-based operation. In 2011, PlayStation Vue and TVision (relaunched/rebranded only three months ago) didn’t even exist, Google Fiber had just launched its initial/trial venture, and the extremely popular Hulu brand hadn’t added its live-TV option.

“Some variables are more difficult to predict than others, and that’s one more reason we feel we’re in a great position as a long-term (through 2035-36) partner with ESPN,” Swofford said. “Wherever technology goes, wherever consumer preferences go, we’re in bed with the best possible partner you can have in the sports world.”

The bottom line? With the initial liftoff and perhaps the long-term success of its new channel hanging in the balance, the ACC has behind it the powers of Disney, ESPN and their accompanying distribution machine.

“The Pac-12 fully owns its network, and there obviously can be some advantages to that, but it has not had a distribution partner like we have with ESPN, or like the Big Ten has with Fox,” Swofford said. “That can make distribution very, very difficult.”

What’s up with the holdouts?

Some of the forces of this TV negotiation universe apply to everyone. Others vary significantly within carrier types, or even on a case-by-case basis.

First, everybody’s costs have been going up, on both sides of the negotiating table. Just as Disney directed ESPN to adopt cutbacks and layoffs to combat the sports industry’s rising rights fees and falling cable subscriber numbers, those who carry sports programming have been dealing with challenging circ*mstances of their own.

According to industry analyst SNL Kagan, sports programming costs as a percentage of cable average revenue per user was an estimated 22 percent in 2018, up from 14 percent in 2009. The average sports programming cost per subscriber grew to $18.55 in 2018, up from just $9.09 in 2009. Those are seismic shifts, too.

Thus, some complex ACC Network negotiations continue, including with three (Comcast/xFinity, Charter/Spectrum and Dish) of the largest cable or satellite providers in America. Together, they have as subscribers about 47 million TV households or about half of all residential pay-TV customers in the United States.

“You always want distribution to be as high as possible at launch, of course, but you also want to do things right for the long run,” Babco*ck said. “We understand that it could take two or three years to get close to what we would consider full distribution. In either case, our numbers at launch are going to be fantastic.”

In the meantime, especially with these biggest deals, it’s easy to see both the leverage and concerns on both sides of the negotiating table.

Disney, ESPN and the ACC want and need as high a price as possible for their new ACC Network, but they can’t be too extreme with their demands or they’ll damage their distribution numbers and exposure levels. The carriers want and need the lowest price possible, but they also have an incentive to be reasonable, because they don’t want their distribution competitors luring away their customers on the basis of a more compelling lineup of channels and/or content.

Beyond those basics are a bunch of variables. When does the provider’s contract with Disney come up for renewal? How many ACC alumni/fans live in the areas they cover? (All conference-specific channels charge much higher “in-market” rates and much lower “out-of-market” rates to their carriers.) Within those areas, how intense is the passion for ACC coverage?

On contractual matters, providers with existing Disney/ESPN deals tend to be much harder to budge on new ideas and expenses, whereas those up for renewal or close to it already are engaged in such conversations. On the passion question, of course, shoulder shrugs and apathy depress the price. Rabid fanatics channeling Barnhart’s burning-building idea, and threatening to change providers, inflate it.

“I’ve told my mother, I’ve told my wife,” Currie said. “You’ve got to call your provider and demand that you have access to the ACC Network.

“Sometimes fans see or hear about some really, really special people who make huge, multimillion-dollar financial gifts to Wake Forest or another ACC institution, and they wonder: How can they, without those sorts of resources, possibly make a big impact, too?

“This is one of their biggest and best chances to make a huge impact in their own way. The ACC Network is a great example of the grassroots impact of all fans of our league, because that’s what’s driving the early success of the ACC Network right now.”

Given that a huge deal with AT&T/DirecTV (19 million customers) already is in place, it will be interesting to see how things go between now and Aug. 22 with the only other two pay-TV providers connected to more than 10 million U.S. households.

Comcast/xFinity (21 million customers) has a huge presence in the ACC footprint — with millions of households in Florida, Georgia, Massachusetts, Pennsylvania and Virginia in particular — but only tiny numbers in ACC-crazed North Carolina, for example, where the league and four of its longest-tenured members call home.

Also, Disney’s existing 10-year contract with Comcast/xFinity won’t expire until 2022. That means the provider is unlikely to have maximum urgency about significantly increasing its ESPN-related programming costs in the near future, even for a promising new channel such as the ACC Network.

Would Disney agree to a lower, introductory rate for Comcast/xFinity to carry the ACC Network, just to get that new relationship rolling, with the caveat that it would ask for a higher (market) value starting in 2022? If so, would that complicate Disney’s other negotiations? If not, and Comcast/xFinity won’t budge, will ACC fans who are customers of that cable company really wait three more years to enjoy the ACC Network?

“I have Comcast in my house right now, and I get both the Big Ten Network and the SEC Network, and I will absolutely cancel if I can’t get the ACC Network,” Babco*ck said. “I know I’m only one consumer, but I know there’s a lot of people like me here in Virginia, and in other Comcast markets as well.”

The Charter/Spectrum (16 million customers) negotiations offer much different dynamics, in part because they involve the largest TV provider in North Carolina, which has been the cultural center of the ACC for the league’s entire 66-year existence. The company also has millions more customers scattered throughout Florida, Georgia, Kentucky, Massachusetts, New York, South Carolina and other ACC states.

Virtually everyone contacted for this article, representing the industry at large and those on both sides of the negotiating table, expects this contract to get done soon. Yet with the ACC Network launch just a little more than a month away, there’s still no deal.

“We’ve had some discussions,” said Charter/Spectrum senior spokesman Scott Pryzwansky, a former ACC broadcaster who now leads the cable giant’s communications in its Carolinas region. “But we don’t have an agreement at this time.”

There are two main things to keep in mind here. The first is more obvious.

If you’re Spectrum, come let’s say Aug. 1, do you really want your many N.C. State customers still wondering whether they’ll have access — on Aug. 31 — to the one and only place (besides Carter-Finley Stadium) they can get the Wolfpack-East Carolina football season opener, meaning the ACC Network? Heck, so many ECU fans root for ACC teams in various other sports, they might be jumping to other providers, too.

Spectrum also has a significant presence in South Carolina. Again, if you’re in the provider’s shoes, is there any doubt that Clemson fans who want to watch the defending national champions open the season against Georgia Tech on Aug. 29 — again, exclusively on the ACC Network —would switch carriers to get the new channel, that is, if they haven’t grown impatient and made the switch already?

Just in the opening two weeks of football season, Wake Forest and UNC also have games that will be broadcast only on the ACC Network. The Tar Heels, whose fans are energized by the return of coach Mack Brown, face Miami in their home opener Sept. 7. That’s not just another game; under the circ*mstances, that’s must-see TV.

“Everybody knows that a huge number of people in North Carolina, rooting for probably seven or eight different ACC schools in large numbers, are extremely passionate about ACC sports,” Cunningham said. “This is the state where, for decades, teachers and principals were rolling TV sets into elementary and middle school classrooms, just so they could watch the ACC Tournament! Well, those kids are adults now, and as consumers, they won’t stand for not having access to the ACC Network.

“There is no question that the ACC Network will have a lot of subscribers here in North Carolina. Either Spectrum will carry it, or all of those people will switch carriers.”

The final piece of context here, regarding the ongoing Charter/Spectrum negotiations or any others, also is a very important one. Whenever you overlay the ACC Network’s timetable on those of similar launches, the ACC comes out looking good.

The three most relevant examples:

The ACC Network already knows it will start with more subscribers (well more than 20 million) than the Pac-12 Network has (19 million) seven years after launch.

The ACC Network already knows it will start with more subscribers than the Big Ten Network had (less than 18 million) at its launch in 2007.

The ACC Network also knows it is even ahead of the pace the SEC Network set in 2014. Five-plus weeks before its Aug. 14 launch, the SEC Network had only one major partner in place, Dish Network, which had about 14 million customers at the time.

Notably, the SEC Network negotiations quickly escalated from there, assumedly after large numbers of famously fanatical SEC fans ratcheted up the pressure on their television providers, although there were no associated buildings aflame at the time.

Five years ago this month, the SEC announced back-to-back-to-back deals, first with Cox/Contour (July 9), then the absolutely crucial, huge-numbers, double-whopper with Comcast/xFinity (July 18) and Time Warner Cable (July 24). Upon a 2016 purchase, Time Warner Cable customers were absorbed by Charter/Spectrum.

The DirecTV contract didn’t come in for the SEC Network until Aug. 4, 10 days before launch. Mediacom, which served seven SEC states, and Grande Communications (in Texas) were announced as partners on the launch date. Verizon Fios arrived Aug. 26, 12 days after launch but two days before the first football games ever televised on the SEC Network.

Relatively speaking, then, the ACC Network is ahead of schedule. But there’s still plenty of heavy lifting to be done, and deals to be struck, from now to Aug. 22, and certainly for many years to come.

(Top photo of Clemson, ACC Championship Game: Bob Donnan / USA Today)