| FTBL Inside the SEC on CBS contract discussions and what could come next

It was the most anticipated game of the year, a battle of two undefeated SEC teams ranked atop the polls with an SEC West title on the line. ESPN’s College GameDay and SEC Network’s SEC Nation both broadcasted live from Tuscaloosa. Even President Donald Trump couldn’t miss the “Game of the Century, Part 2,” watching the game from a Bryant-Denny Stadium suite.

And, to the surprise of no one, the game did huge television ratings.

LSU’s 46-41 win over Alabama gave CBS the highest-rated college football game of the season with more than 20 million viewers at its peak, the best rating for a regular-season game since the 2011 version of Alabama-LSU, the original Game of the Century. It’s the highlight of what has been a standout ratings season for CBS as the network also has the second-best rated game, Georgia-Notre Dame, and still has the Iron Bowl and SEC Championship Game on deck.

However, a pressing question in certain circles is how long those good times will last for CBS. In conversations with television insiders, conference experts and others with knowledge of the situation, anything but a crystal clear picture emerges about what will happen to the highly valuable SEC package when its deal with CBS ends after the 2023 football season.

CBS has publicly stated it wants to extend the deal, which pays the SEC $55 million annually. Privately, the network has indicated it would like to have a deal done before the end of 2019. To this point, CBS hasn’t made an official extension offer to the SEC, but deal parameters have been discussed, and the SEC has started getting specific on what it wants.

SEC commissioner Greg Sankey declined to go into those specifics but stated he’s taking a long-term view and mentioned presentation, level of exposure and revenue as factors.

“We appreciate that there is stated interest in extending the relationship from the CBS side,” Sankey told AL.com.

CBS wants to keep SEC football but will face stiff competition. The television industry has salivated over a chance to secure the SEC package that has long been considered the biggest steal in the sports TV rights world. It’d be easier to name which networks aren’t interested than all of the ones that are.

“I would assume every major media company that currently broadcasts live sports would be interested on some level,” said Dan Shevchik, vice president of Sports Media Advisors, which has helped negotiate $10 billion worth of media rights deals. “It’s arguably the premier college football package. You have to think a little about their other rights deals and how it would fit with them.”

One key factor is how CBS and SEC each interpret the current contract, which was agreed to in 2008. Within the contract is a provision that states, “CBS would have the right of first negotiation/first refusal for at least the same terms for a term commencing in 2024-25 and beyond for football and basketball.” Those terms include selection priority (CBS gets first pick of SEC games), game time and exclusivity, among other factors.

But in a confidential memo obtained by AL.com addressed to the SEC’s presidents and chancellors, Sankey pushed back on the legality of that specific provision.

“We believe that we have a good faith obligation to offer to enter into an exclusive negotiation period with CBS,” Sankey wrote, “but do not believe that CBS has any first refusal rights for reasons that can best be addressed by our legal counsel.”

Why is this a big deal? If the SEC’s reasoning is accurate, it would mean the league could shop for offers once the negotiating window is over and wouldn’t have to bring those terms back to CBS to give the network a chance to match them. One TV insider was surprised both sides weren’t on the same page and pointed to it having a potentially huge impact on negotiations. The loss of the first refusal would take away a major advantage CBS has to keep the rights. It adds pressure to CBS to get a deal done before the exclusive negotiating window ends, lest it allows its major broadcast competitors a chance to steal the “crown jewel” of college sports packages as multiple experts referenced it as to AL.com.

Where could it land?

CBS, as the current rights-holder, is still viewed by some of the insiders AL.com talked to as the favorite to keep SEC football rights. The network loves having the SEC on its platform and knows it will have to pay significantly more than $55 million a year to keep it. CBS hasn’t hidden the fact it is prepared to do that.

But to keep the SEC, it will have to hold off potential bids from traditional players like Disney, FOX, NBC and Turner Sports plus newcomers such as the John Skipper-led DAZN. FOX has had tremendous success with making its Big Ten noon game into a big deal including a pregame show with Urban Meyer and Reggie Bush that is well-liked. It would be a surprise if FOX didn’t try to wrestle the SEC away from CBS. NBC has focused on Notre Dame but could look to add a valuable package that gives it more inventory and relevance.

CBS’ toughest competition for the top SEC TV package is expected to be from Disney. Disney already owns a large slate of SEC games that it broadcasts on its ESPN and SEC Network channels, but internally the feeling is landing the current SEC on CBS package is a major priority. Not only would there be tremendous value for the company to own the entire SEC slate but it would create considerable more flexibility for scheduling games. Disney could carve out a weekly spot on ABC to give the games maximum exposure the way CBS has done each week in its 3:30 EST time slot for the SEC. There could be a similar commitment to more cameras and the best possible talent announcers to give it the big game feel CBS has excelled at each week. Currently, ABC has its top announcing crew of Chris Fowler and Kirk Herbstreit slated for its primetime game.

One factor seemingly working in Disney’s favor is CAA super agent Nick Khan. The SEC hired Khan and Evolution Media’s Alan Gold to represent the league in its negotiations with television networks, signaling to many that it wanted a big payday this time around. Khan represents a lot of the sports media world’s biggest names including top ESPN college football talent like Herbstreit, Rece Davis and Paul Finebaum. Khan has done deals with all the major players -- he facilitated the WWE deal with FOX and NBC, for instance -- but insiders believe he’s been pushing SEC leaders to strongly consider ABC/ESPN. Among the reasoning, he’s pointed out advantages to aligning closer with a growing Disney company that is making big purchases (21st Century Fox) and investing big in over the top platforms (ESPN+ and Disney+) compared to Viacom/CBS which recently combined in a merger expected to be finalized in December.

The question, though, is would the SEC give all of its football games to one network? The league’s current arrangement of having marquee games on CBS and ESPN has been very successful from an exposure standpoint. Exposure is a critical factor and is the reason the SEC opted to take less money than it could have gotten on the open market to stick with CBS in its 2008 deal. CBS has also made clear it is all-in with the SEC and promotes the league in a variety of ways that competitors that have agreements with multiple conferences couldn’t do. There’s value in that.

"All of our broadcast relationships have been a part of expanding the attention around the Southeastern Conference beyond our state and our country borders,” Sankey said. “Clearly that opportunity on Saturdays at 3:30 eastern through CBS has been a long-standing part of that presentation which has benefited the CBS, and we think we’ve benefited CBS at the same time.”

One possible solution, according to a few TV insiders, is the SEC maintains relationships with both partners but rotates the weekly top pick each week between CBS and ESPN. It would be a blow to CBS to not automatically have its pick of the best SEC game each week but would allow it to stay in the SEC -- and really all of college football -- business. ESPN already has similar arrangements with FOX for the Big Ten and Big 12 TV rights, and recently kicked in a reported $40 million per year to secure the Big 12 Championship football game through 2024. It would love to get its hands on the SEC Championship too, especially when it delivers monster ratings like last year’s Alabama-Georgia SEC title game did with 17.5 million viewers. The expectation is CBS and ABC/ESPN will want the rights individually but the SEC could opt for a route that gives both a piece and lets it maintain some continuity for its fans long accustomed to watching football on those two networks.

How much will it go for?

If you want the surest bet in the world, it’s that the SEC rights will go for more than their current $55 million per year.

Significantly more.

How much exactly is a source of great debate in the television industry. The general expectation is the price will at least be quadruple the current value, with many predicting it to be in the $250-300 million per year range. The SEC Championship Game alone could command more than the $55 million CBS is paying for the entire slate of games.

What that final number ends up being could depend on multiple factors. One factor is that the Big Ten is currently making $240 million per year from FOX (that includes basketball), according to multiple reports, in a deal that expires 2023. The SEC would love to make more than the Big Ten and could wait to see what the Big Ten gets in its next deal before agreeing to anything.

Another factor is the NFL rights deals expiring in 2021 and 2022. CBS has been eager to get a deal done with the SEC before its NFL rights deal comes up, but the SEC could choose to wait until the dust settles. Two different strategies could be employed there. One is you get a deal done before the NFL deals to guarantee the money doesn’t dry up and you get the best possible deal. The other is you wait until after those deals, knowing that whichever major network loses out on the NFL could pay big for the SEC.

NHL and PGA Tour rights will also come up before the SEC on CBS deal expires which could have an impact on the market albeit not nearly as big as the NFL. CBS recently added UEFA Champions League rights in a move that caught the industry by surprise though insiders don’t expect it to limit how much it can spend to keep the SEC or PGA Tour. In fact, CBS adding the Champions League could enhance its All-Access OTT platform and portend future aggressiveness to not only keeping but adding sports TV rights.

The conventional wisdom suggests the SEC should be patient when surveying the market. The panic that sports TV rights fees could crater in light of cord-cutting and rising costs has subsided. Instead, the SEC is entering a market with more entities than ever desperate to add live sports.

“Everything is being done in the context of this rapidly changing landscape where paid TV households are still declining but at the same time the relative value of live sports is increasing,” Shevchik said. “It’s the only thing people are still watching live, it’s aggregating audiences, viewership this year is going up still and in all that context, sports are more valuable than ever.”

The SEC has more leverage than ever, too. It should have its pick of options, all of which will present offers with varying levels of money and exposure attached. Sankey, who has been actively involved in the process, will work with Khan and Gold to gain consensus among the SEC chancellors and presidents on which direction to head. A decision isn’t believed to be imminent -- Sankey said his ideal timeline for a decision was “not for public discussion” -- but with CBS’ push to start discussions this year, a conclusion should arrive long before the end of 2023. The conversations are already ongoing.

Former SEC commissioner Mike Slive and his trusted adviser, Chuck Gerber, convinced the SEC leaders to eschew bigger money because the other benefits of staying with CBS were worth it. What Sankey and his advisors prioritize and recommend to the SEC is the decision the television industry can’t stop thinking about.
It's a good time to be at the negotiating table for the SEC. The coverage of the SEC by CBS has seen a 31% increase this year which marks the highest average in the last 29 years.

Yep. 29 years.
I can see where the SEC would want to keep CBS and ESPN for exposure purposes. If they do pull out and shop around.....I hope to the Good Lord in Heaven that they do not go with Fox. People just think they hate Gary Danielson. When Tim Brando, gets behind the mic and starts with his coon-ass homerism and venom against Bama......will make it rough to watch a game.
I can see where the SEC would want to keep CBS and ESPN for exposure purposes. If they do pull out and shop around.....I hope to the Good Lord in Heaven that they do not go with Fox. People just think they hate Gary Danielson. When Tim Brando, gets behind the mic and starts with his coon-ass homerism and venom against Bama......will make it rough to watch a game.

I think the only options are CBS and ESPN/ABC. Fox is locked up with the Big10. Maybe NBC will make a play since all they have is Notre Dame home games.
I don't see CBS letting the SEC get away. It would be nice if the SEC negotiated more night games in the contract, though. The mention of Turner Sports in there was interesting. They haven't done much college football in years but they have really tried to start adding more and more in the way of sports. I think they even bought out a kick boxing league to air on TNT and TBS recently.
I prefer a deal with one of the freely available OTA channels. But I'm a cord cutter, the only thing I pay for is Neflix and Amazon Prime.

I would imagine going to a pay channel would be a negative, given the cord cutting movement and way in which the younger generations are subscribing to TV.

The NFL has had several attempts at using new streaming providers and none of these has been really been successful from my perspective.
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