Am I the only one that thinks this is just a run on an active 'bubble' like the dot.com bubble, or the housing market bubble? I mean, it is pretty clear to see that this is just that, and the bubble is going to pop at some point. There simply aren't enough players for ESPN to bid against for them to justify these Billion dollar TV deals...until or unless the NBC Sports Network and others come into the fold as serious Sports providers. This is all happening so fast & is so reactionary because people see it as a window that is closing, and once the bubble bursts, if you hadn't made your cash grab, there won't be any more cash left to grab...
The problem with this is that conferences like the BigTen are already seeing actual value in the contracts. The dot.com bubble came from investors thinking that these websites were going to create future value out of an unproven business model. The BigTen is already making money off their own network. They already get paid something like $.75 per cable subscriber that has their network. They already have established what they can get from ad revenue based on how many households get those ads. That ad money isn't going to go down. Live sports advertising costs are at a premium because thats about the only thing people don't TiVo and FF through the ads later. It's a much more established business model. The housing bubble was created by millions of stupid Americans buying houses they couldn't afford because stupid, greedy bankers were giving them loans. Unless people just decide to stop watching live FB, the revenue stream isn't going away. The bubble may burst someday if viewership goes down, but it won't nearly as hard as the dot.com or housing. College TV contracts aren't built on a house of unproven business model cards.
There may be some merit to the idea that some conferences are overextending themselves, though. The first reports of the SEC's new contract offer after adding A&M and Missouri were that it was underwhelming at best. And I don't know if this Nate Silver post was linked here yet:
http://fivethirtyeight.blogs.nytimes.com/2012/11/20/expanding-eastward-could-dilute-big-ten-brand/
What Silver points out feeds the bubble concept. If the cable TV model goes the way of a la carte and/or Internet distribution (i.e. K-State HD TV), they won't be able to make all of that money off of the 'scam', and you will need people to purchase your content, specifically. That may mean Maryland and Rutgers, eventually, will be net losers because all of that money you're getting for carriage rates will go away, and you'll be asking those few Rutgers and Maryland fans (few relative to the state populations) to pay that cash for BTN every month. So, if that's the case, how many millions of viewers go away? How much money does that equate to, especially once you factor in how much less each team gets after the split?
I think, for us, our 'risk' in this area is minimal because the major platforms we're broadcasting tier 1 and tier 2 content on aren't going away. People will buy ESPN, ESPN2, and ESPNU in most of their a la carte packages. Most folks will purchase access to FSN Kansas City or FSN Midwest because there is overlap with other sports teams they watch (i.e. Royals, Cardinals, Blues, etc.).
However, the other 'risk' is that this bubble doesn't burst, and we're left holding the bag in 13 years.
