The Pac-12 has been trying to make a deal with DirecTV for years, but that's even more unlikely to happen now, with AT&T deciding that its U-verse cable lineup will no longer carry the Pac-12 Networks.
The Pac-12 announced a gut-punch today that was months in the making:
AT&T will no longer carry the Pac-12 Networks on its U-verse service, effective Sunday.
Yep, the conference’s wholly-owned networks have been dropped by a distribution partner that just happens to be one of the largest telecommunications brands in the world.
Not. Good. At. All.
Neither the Big Ten Network or the SEC Network has ever lost a major distribution partner.
“We are of course disappointed by AT&T’s decision to no longer carry Pac-12 Networks on AT&T U-verse; we made every effort to extend our agreement,’’ Alden Budill, the networks’ SVP/head of distribution, said in a statement released to the Hotline.
“Even so, we’ve known this was a possibility for some time, and we have planned accordingly.
“We’re staying focused on maximizing the strong value we deliver to our long-term partners, and we’re proud that Pac-12 fans anywhere in the country have multiple ways to access our networks and the sports they love.”
Quick background before we assess the situation:
The conference’s contract with AT&T, which included U-verse and a wireless sponsorship deal — but not carriage on DirecTV — expired this summer.
In late July, Pac-12 Networks president Mark Shuken told the Hotline that he was working on an extension of the deal.
That extension, which remained in place through the football season, has expired.
U-verse is gone.
So is any chance of a DirecTV deal with it, at least for the near future. (What happens when the Pac-12 renegotiates its media rights in four years is anyone’s guess.)
And so, too, is the wireless sponsorship component.
(Going forward, the Pac-12 will partner with wireless companies that are also fully committed to distribution. AT&T wasn’t all-in on carriage. Comcast and Cox, on the other hand, are committed, and the conference recently announced sponsorship deals with both. Shuken alluded to this approach in an interview in March.)
Reaction to the news:
1) To a certain degree, the decision to drop the Pac-12 Networks reflects AT&T’s view of the landscape.
In August, the company cut ties with beIN Sports, a global, soccer-heavy network.
In October, AT&T missed earnings estimates, revealed that DirecTV is bleeding subscribers, and got hammered by investors.
(The Dodgers still aren’t on DirecTV, by the way.)
2) The Hotline has been tracking the situation closely since the late spring, knowing the Pac-12’s contract with AT&T was coming to an end.
Multiple industry sources expressed deep skepticism that AT&T would re-up with the conference for the 2018-19 sports cycle.
Based on that, it’s not unreasonable to conclude the Pac-12 Networks did well to extend the deal through the football season.
3) Losing AT&T cannot be framed as anything other than a blow to the conference and commissioner Larry Scott — the networks are his brainchild; he is their chief executive.
But that’s due as much to the awful optics — to getting dropped by a partner of AT&T’s stature — as to the real-world impact.
The Pac-12 Networks are in approximately 20 million homes nationwide, with Comcast, Cox and DISH collectively occupying a significant share of the subscribers.
Our best guess is that approximately 400,000 – 500,000 subs watch the Pac-12 Networks on U-verse.
If we estimate a price point of approximately 85 cents per subscriber per month, that equates to roughly $5 million per year, or about $400,000 per school per year.
That’s 1.5 percent of the annual distribution paid by the conference to each campus (approximately $30 million per school).
(Please note: The other facets of the deal, such as wireless rights, make the net dollars involved difficult to assess. The Hotline’s estimate is extremely rough.)
Key point: As Budill mentioned in her statement, networks leadership knew this outcome was a distinct possibility.
It stands to reason Shuken and Budill were conservative with financial projections for FY19 and factored the potential loss of distribution into the networks’ budget in advance.
In other words, I’d be surprised if we see a round of Pac-12 Network layoffs or an unexpected drop in the revenue projections to the campuses.
What’s next for the networks? The Hotline is not aware of a looming distribution deal to offset the loss of U-verse.
What next for U-verse subscribers scrambling for access to the Pac-12 Networks?
Here’s where this column morphs into a PSA.
- * Obviously, Comcast, Charter, Cox and DISH are options, depending on your location and needs.
- * There are two streaming deals in place, as well: Sling and fuboTV. (Sling is more for general entertainment, fubo for sports. Both are month-to-month subscriptions.)
- I’d urge fans to visit getpac12networks.com, which has a FAQ page and channel finder.