Disney’s ESPN has finalized a deal to buy the rights to college football’s most-watched television package for $300 million per season—at least five times the $55 million per year fee that current rightsholder CBS pays the conference, Sportico confirmed. ESPN’s expected purchase was first reported in December of 2019 when talks began, but sorting through legal issues amid a pandemic slowed the process.
The SEC and ESPN made the announcement official Thursday afternoon during Disney’s 2020 Investors’ Day event.
ESPN inked its current extension with the SEC (which includes basketball) in 2013, when it agreed to a 20-year, $2.25 billion pact, which worked out to $150 million per season. It was in the course of those negotiations that ESPN said it was interested in launching a standalone SEC channel. In taking over the package long held by CBS, ESPN’s total commitment to the conference is now worth some $5.25 billion.
CBS’s current SEC package gives it the rights to the conference’s best game each week and the SEC Championship Game, which last season averaged 13.7 million viewers and a 7.9 household rating, making it the second most-watched regular-season college football game behind only CBS’s Nov. 9 broadcast of the Alabama-LSU game (16.6 million viewers/9.7 rating). The LSU-Georgia title tilt was the most watched conference championship of the season and generated a staggering $22.3 million in advertising revenue for CBS, with individual 30-second units fetching as much as $330,000 a pop, per Standard Media Index data.
CBS is on course to have aired the top-rated and most lucrative college football package for 12 years running. Three of the five most valuable teams in terms of ad revenue generated in 2019 were in the SEC (LSU, Auburn and Alabama).
The package is arguably the biggest bargain in sports television rights. CBS’s original 15-year SEC contract runs through the 2023-24 season and is worth a grand total of $825 million. The $55 million annual fee the network pays the SEC is a fraction of current market value for those games and left the conference nearly $100 million behind the Big Ten in revenue generation during the 2018 fiscal year, the first to include money earned from the Big Ten’s massive 2017 media rights deal.
While initial speculation suggested that ESPN would look to buy out the remaining years on CBS’s SEC contract, insiders today said the broadcaster has every intention of reaping the benefits of its association with college football’s biggest TV draw. That commitment, naturally, is subject to change, especially as CBS’s renewal of its Sunday NFL package looms on the near horizon.
ESPN’s 10-year, $3 billion deal for the expanded rights package will pay the SEC about $20 million for each Game of the Week telecast and substantially up its media revenues. Disney also is the controlling stakeholder in the SEC Network, owning 80% of the joint venture. Hearst claims the remaining 20% in a structure that mirrors the ownership split in ESPN. With ownership of the conference’s network as well, ESPN will now own the rights to all SEC football games.
Disney’s ownership of ABC is notable as ESPN could solicit broadcast slots on the flagship network for the games it will acquire from CBS. Landing on network television has long been important to the SEC, and this would allow ESPN to still accommodate that desire. At present, ABC’s Saturday Night Football showcase is averaging 3.71 million viewers and a 0.9 ratings among adults 18-49, making it broadcast TV’s 15th highest-rated program in the demo.
While CBS was initially interested in renewing with the SEC, the broadcast giant exited negotiations last winter after making a bid reportedly around the $300 million mark. At the time, a network rep said: “We made a strong and responsible bid. While we’ve had success with the SEC on CBS, we are instead choosing to aggressively focus on other important strategic priorities moving forward.”
In contrast to the lucrative Saturday SEC contract, CBS has to dig deep for its next big Sunday football investment. In order to hold onto its Sunday NFL portfolio, CBS will have to pony up an estimated $1.8 billion per year, assuming a price increase of 80% over the current market value.