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Why Are SEC Schools Getting So Little Money From SEC Network?

SECnetworklogoIn a recent analysis of Southeast Conference revenue, Chadd Scott of SportsDay Now determined that SEC schools received between $5 million and $6 million each in revenue from SEC Network, the conference’s joint venture with ESPN.

If we round that off at $5.5 million per school, the 14 SEC schools received a combined $77 million from SEC Network.

That number seems kind of small, doesn’t it? After all, wasn’t SEC Network supposed to collect nearly half a billion dollars in carriage fees alone?

According to SNL Kagan’s latest numbers, 69.1 million homes have SEC Network in their pay TV services, and the channel receives an average of $0.66/month from each of those homes. (Homes in SEC territory reportedly pay $1.30/month.) That adds up to $547 million that SEC Network collects in carriage fees alone, to say nothing of how much advertising revenue the channel makes.

So why are SEC schools receiving only $77 million in a year from a network that collects $45.6 million per month?

There might be perfectly logical explanations. Perhaps the network costs more than a million dollars a day to operate (which seems doubtful), and the network and conference are splitting the remaining revenue. Perhaps the SEC’s contract with ESPN worked the start-up costs of the network into the contract (which seems less doubtful), and the amount of money schools receive in the coming years will increase dramatically.

For now, though, given that this conference paid each of its schools $31.2 million total in TV revenue, $5.5 million each doesn’t seem like quite the windfall that many expected it would be. Then again, it still beats the hell out of the Pac-12 Network, which only collected $57.6 million in carriage fees and still has no carriage agreement in place with DirecTV. Perhaps that alone justifies the SEC’s decision to partner with ESPN and let them own the network, rather than go it alone like the Pac-12 did.

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