Success of SEC Network Is No Sure Thing

The SEC had another banner season at the bank, as its members reeled in around $21 million per school during the fiscal year of 2013.

That puts the SEC well ahead of everybody else and just behind the king of cash Big Ten, which distributed $23-$26 million per school in the same fiscal year. And the SEC has reasons to be bullish on the future, as its own SEC Network is scheduled to launch Aug. 14.

But any prediction that, with the SEC Network, the conference will out-pace the Big Ten in earnings would be premature. There are still a number of issues involving the nascent network, not the least of which is that it has yet to reach agreements with some of the nation's biggest TV carriers.

With an asking price of $1.30 per subscriber within the conference's 11-state footprint, the SEC Network is demanding significantly more than either the Big Ten ($1) or the Pac-12 ($.80) for their networks. As a point of comparison, the NBC Sports Network, which carries the Stanley Cup playoffs and the English Premier League, costs merely 31 cents per subscriber.

So far, DirecTV (20 million subscribers) and Comcast (22 million) have not caved to the SEC's demands. DirecTV in fact has not carried the Pac-12 Network since its inception two years ago and the impasse is expected to continue into a third season this fall.

Even with the SEC fans threatening to make a switch, these providers might not budge so easily as the sports television landscape has changed dramatically over the past five years. The proliferation of regional sports networks and their exorbitant fees have forced the providers to re-evaluate their business model.

In Houston, the Comcast regional sports network that carries the Astros and Rockets recently filed for bankruptcy after it was unable to get on any carriers other than its parent Comcast. In L.A., the popular Dodgers—even with the legendary Vin Scully in the booth in perhaps his final season—have been blacked out this season on virtually every carrier other than Time Warner, which owns the new sports network that broadcasts the team's games.

The SEC Network, of course, has one advantage over the others as it's part-owned by ESPN, which is the most expensive and perhaps the most indispensable cable network. ESPN has already made sure that the SEC Network will not be stuck only with third-tier football games involving FCS schools. South Carolina-Texas A&M has been chosen to debut the network's lineup in the 2014 season.

But even with ESPN's clout, there is no guarantee that these carriers, facing considerable consumer backlash over rising cable bills, will play ball. For as popular as sports is in general and in particular in the South, there is still a considerable number of people who don't care and don't want to pay for something they won't watch.

"A lot of the households would assign a very low value to an SEC regional sports network," Andrew Zimbalist, a noted sports economist recently told USA Today. "There is a real structural question of how important it is for a cable distributor to carry this, particularly in light of the fact the bottom income earners have had their wages stagnate over the last decade and cable bills keep going up and up and up.

"I think we've been in a bubble and there has been a lot of over-bidding, and these little fracases we're seeing are harbingers of sustained battles that will be happening."

SEC has quite a bit of brand power and fan loyalty. But given the current business climate, the success of the SEC Network is hardly a certainty.