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Does Raycom Hold The Keys To The ACC Network?

ACC Network LogoNews emerged during the ACC’s annual spring meetings last week that the conference is still a long way from launching its own TV network, and the primary issue appears to be syndication rights. According to Sports Business Daily:

When it signed its ACC deal in 2010, ESPN and Charlotte-based Raycom Sports cut a deal that grants Raycom the ACC’s digital and corporate sponsorship rights, plus a heavy dose of live football and basketball games. Through a sublicensing agreement, Raycom owns the rights to 31 live football games and 60 live men’s basketball games. 

Even if the conference is able to buy back those rights from Raycom, a second roadblock remains. Raycom sublicensed 17 of those football games and 25 of those basketball games to Fox, which carries the games on its regional sports networks throughout the ACC footprint. Live local sports programming is important to Fox’s RSNs, and they are not likely to give up those games cheaply.

The games that stay with Raycom make up the ACC’s long-running syndicated package that is distributed to more than 50 million households on over-the-air networks, and reaches 25 of the top 50 U.S. TV markets. Those deals extend through 2027. 

SBD suggests here that if the ACC wants to create its own cable network like the Big Ten and Pac-12 have done, and like the SEC intends to do next year, it has to find a way to get those syndication rights back from Raycom Sports — a company that has had a working relationship with the ACC since 1981. Raycom pays ESPN $50 million a year to sub-license football and basketball games, then syndicates them to local broadcast TV stations. (WRAL-TV in Raleigh, NC, has aired Raycom’s feed of the ACC Men’s Basketball Tournament for decades and used to blackout ESPN’s coverage of those games on cable and satellite, until the new contract eliminated those blackouts.)

The money from Raycom goes directly to ESPN and not the schools. The conference’s contract with ESPN, however, will pay the schools more than $17 million each per year — tall money, to be sure, but it’s a few million behind the Big Ten, Big 12 and Pac-12, whose schools all get at least $20 million per year from various deals with ESPN and Fox Sports. Once the SEC Network comes online, it’s estimated that SEC schools could make as much as $25 million per year.

To understand what the ACC could be missing out on by not having its own cable network, let’s sketch out some potential numbers behind such a network.

We’ll start by dividing the region into three groups of states — “Core States”, “Split States”, and “Border States” — in which the network would try to get carriage. The Core States are all in the southeast, from Virginia to Florida, since those states have the most ACC fans. In that region, an ACC Network could demand as much as the Big Ten Network in its core region — about $0.80/month per subscriber.

 # of Cable HomesAvg. Sub FeeAnnual Sub Revenue
Florida5,186,900$0.80$49,794,240
Georgia2,025,600$0.80$19,445,760
North Carolina2,084,400$0.80$20,010,240
South Carolina996,950$0.80$9,570,720
Virginia1,903,900$0.80$18,277,440
TOTAL12,197,750$117,098,400

Next we have the Split States — places where a school’s fan base makes up about half the state. Cable subscribers in Lexington, KY, for example, wouldn’t care so much about the ACC Network, but subscribers in Louisville certainly would. The Pittsburgh area will care more about the ACC than eastern Pennsylvanians. Syracuse might have a fan base in New York City, but its home base is upstate — and at this point, Duke and UNC might have bigger fan bases in NYC and New Jersey than Syracuse. In these states, let’s say the average subscriber fee ends up being closer to $0.50/month. (We’ll include Massachusetts in here, even though Boston College probably has a strong fan base in New England.)

 # of Cable HomesAvg. Sub FeeAnnual Sub Revenue
Kentucky981,360$0.50$5,888,160
Massachusetts2,230,240$0.50$13,381,440
New York5,684,780$0.50$34,108,680
Pennsylvania3,473,150$0.50$20,838,900
TOTAL12,369,530$74,217,180

Finally, we have the border states, which are near large ACC markets, but not close enough that carriers would be willing to pay much for the network. Pockets of Ohio might pay attention to Pitt and Louisville. Southern Indiana would watch Louisville, while northern Indiana and parts of Chicago will watch Notre Dame. UVa and Va Tech grads in D.C. and Maryland will want to watch. In these states, the network will not command nearly as high a subscriber fee.

 # of Cable HomesAvg. Sub FeeAnnual Sub Revenue
Connecticut1,146,780$0.20$2,752,272
District of Columbia197,650$0.20$474,360
Illinois2,793,260$0.20$6,703,824
Indiana1,362,930$0.20$3,271,032
Maryland1,565,260$0.20$3,756,624
New Jersey2,679,510$0.20$6,430,824
Ohio2,978,860$0.20$7,149,264
Rhode Island352,970$0.20$847,128
TOTAL9,053,280$28,158,696

Here’s how all those numbers add up:

 # of Cable HomesAnnual Sub Revenue
Core States12,197,750$117,098,400
Split States12,369,530$74,217,180
Border States9,053,280$28,158,696
TOTAL33,620,560$219,474,276

Yes, some of the final numbers might be a bit lower than this, and these numbers ignore the potential to generate money from sports-related bundles of channels in other parts of the country. Still, theoretically, an ACC Network could generate about the same amount of money as the Big Ten Network, which currently pays each school about $9.3 million/year. If ACC schools could get that much from an ACC cable network, each school could earn more than $26 million/year from cable TV — more than SEC schools stand to make overall. That sure seems like a lot of money to leave on the table.

Raycom Sports LogoSo how exactly does the ACC benefit from remaining partnered with Raycom Sports? Does Raycom bring in enough corporate sponsors to fill in that $3 million gap between the ACC and the Big Ten? Does Raycom’s ACC Digital Network offer the conference some extra money? Does John Swofford believe the ACC should maintain its presence on broadcast TV? There would certainly be some anger in the Raleigh-Durham area if the Duke-North Carolina game weren’t on WRAL anymore, but it’s not like most fans wouldn’t just switch over to ESPN or find another way to watch.

Or… could it be that the ACC will partner with Raycom, rather than with ESPN, to launch an ACC cable network?

It would be a bold move but not exactly a huge surprise. Turn on any Raycom broadcast off ACC sports, and you’ll see ACC Network-branded studios and ACC Network logos all over the place. It’s entirely possible that the conference wanted to keep its relationship with Raycom so that it could launch its cable network with Raycom. Perhaps working with Raycom will allow the ACC to keep key games on broadcast TV in local markets — Duke v. UNC in the Raleigh-Durham area, for example — while at the same time moving the bulk of its sub-licensed games to the new cable network. What’s more, Raycom has decades of historic ACC footage in its vaults, so it has the potential produce more interesting content than ESPN could.

Finally, cable and satellite TV providers might not be so eager to have ESPN push yet another network on them. Raycom is a new player that adds a little much-needed variety to the channel mix, and it might offer the carriers a slightly more pleasant negotiating experience. That can’t hurt a network trying to get carriage.

Judging from the reports out of those spring meetings, an ACC Network is still a few years away. It’s far from dead in the water, though. Keep an eye on Raycom’s broadcasts over the next few years. You’ll see all sorts of signs suggesting this network will be upon us soon enough. ACC schools probably wouldn’t have agreed to that Grant of Rights deal if it weren’t.

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