Longhorn Network: Closer To Reality
Posted by srr50
The business of getting the Longhorn Network up and running by August is well underway. ESPN has its management team in place, and it includes a Texas-Ex as head of production. Just last week, the spring game was used as an opportunity for unveiling the brand for the 24-hour network.
There is an informational website that gives fans a checkpoint as to how to get the Longhorn Network. One caveat. Don’t panic if you put in your zip code in and get zip in return. Negotiations are well underway for distribution, and it will be finalized well before the air date.
When the 20-year, 300-million deal was announced between ESPN and UT, there was plenty of skepticism over the dollars and the length of the pact. We have already gone into some detail as to how it can work financially for both parties thanks to the dreaded dual-revenue streams explanation. Obviously this is new territory – for both parties. The Big 10 Network experienced some growing pains, but is now a robust success, and while this is project involves one University as opposed to an entire conference, UT and ESPN can use the Big 10 Network as a useful template to chart its course.
The Longhorn Network will carry at least 200 exclusive UT events live annually. It will feature at least one football game and eight basketball games each season. Baseball and women’s basketball will also drive a good portion of the live broadcasting. While there may only be one football game broadcast live over the network, every game day will be the core live event offered. The Network will offer pre- and post-game programming throughout the day. Expect the Longhorn version of College GameDay to offer as many as four hours of pre-game coverage and then offer post-game analysis stretching well into the night.
Once a football or basketball game is carried live by one of the Big 12 media partners it will be available for encore presentations on the Longhorn Network. As a matter of fact, there should be a strong Longhorn “Classic” segment on the network. Texas has an extensive archive of past games and of course ESPN will be able to tap into its own library.
There will be studio programming throughout the week, coaches shows, documentaries as well as academic and cultural programming. It is expected that student involvement will be at a high level as well. The Big 10 network has a history of using students to produce a segment of their programming and it obviously could be a useful recruiting tool for the school of communications.
No major deals with cable or satellite providers have been announced, but with ESPN as a partner that should not be a major stumbling block. Time Warner Cable and Comcast are the biggest cable operators in the state with significant presence in the major metropolitan markets. Both DirecTV and Dish Network are established in the state and will also be at the negotiation table. ESPN has a long history of working with all of these distributors, and since this network is part of the ESPN brand, it will no doubt be sold as part of a “bundle” of channels to distributors.
ESPN is creating a broadband network using ESPN3.com as a template. The broadband network will serve as a companion venue, offering live events of Olympic sports that overlap with games being broadcast live on the network. The broadband content will be available only to those who are subscribing to the Longhorn Network, and will also serve as an on-demand service for replays and highlights of past events. A feed from the network will also be available for mobile users.
Texas High School Sports
ESPN is also creating a stand-alone broadband site that will have content from around the state. It apparently will not have any sort of full-time staff, but will serve more as a clearing house for Texas highs school sports. In other words, it will probably not have the slick look of the UT network or its broadband companion, but could serve as a central location for the local high school broadcasts or coaches film of games throughout the state.
The University of Texas will not be directly involved in the sale of advertising and sponsorships. Texas has long been a pioneer for University athletic programs using a third-party, hands off approach to marketing. It makes for a much cleaner proposition for the University when its main function is as the content provider. IMG College, which has controlled the sales and marketing of UT media rights for a long time, will partner with ESPN on sales and sponsorships. The combination of ESPN and IMG College will no doubt lead to a one-stop shopping center, where much of the media (radio, TV, broadband, etc.) will be sold as a single sales proposition.
Obviously you are talking about a niche market, but it is one that has promise.
The three-network paradigm for ad sales has long since passed. With a proliferation of channels to choose from, and the subsequent splintering of the viewing audience that comes with choice, networks – and advertisers – must refine their marketing campaigns to fit the new viewing habits. With this change, a more sophisticated system for ratings definition has been put in place. Nielsen still gives a scoreboard based on the raw numbers of viewers, but for advertisers, indexing those viewers is much more important.
Indexing simply breaks down the demographics of the audience into subsets of lifestyles. One of the most important subset of viewers is those that watch sports. Indexing begins with a 100 level. That means when a program has a 100 index in a specific demographic profile, its ratings match the percentage of that profile in the overall population, which means an index over 100 indicates that an advertiser is reaching his target demo more efficiently. There is a reason that ESPN can charge over $4.00 per subscriber to carriers, almost $3.00 per subscriber more than most other channels.
Sports fans are key consumers who are brand loyal when it comes to spending discretionary income, especially in the areas of financial, automotive, recreation and travel. They also lead in another category: Word of Mouth. Sports fans are very loyal – to their teams – and to products they trust. They have a season-long commitment to their teams, which means advertisers usually have a captive audience for months on end. Sports fans tend to be influencers in generating word of mouth about brands.
There is also the level of discretionary income that several categories of sports fans possess. As an example, 27% of all golfing households earn more than $100,000 annually. This produces a 174 index, which means golfing households are 74% more likely to earn $100,000 than the average viewer. Nielsen reports that major sporting events are much more likely to attract households that are earning $100,000 or more. According to the Nielsen report, the BCS game over-indexed at 153, the Masters over-indexed at 163, NCAA basketball tournament over-indexed at 168.
The Masters telecast has just three sponsors annually – Exxon Mobil, AT&T and IBM.
The Longhorn Network will have a target audience that while small in the overall scale of total viewers, will be very attractive to certain advertisers. There are over 450,000 living UT alumni and the Longhorn Network offers advertisers a long-term venue to reach an audience that is educated, in the upper-middle income bracket and has proven to be brand loyal.
The starting median salary for a University of Texas graduate is $49,100. The mid-career median salary is $87,500.
The alumni from the Graduate schools will start out at a higher level – in 2010, the UT law school reported that their graduates had an average median wage of $91,708 starting out. The key for advertisers who want to use the Longhorn Network will be the price point to reach this audience as well as the idea that they will have multiple media outlets to get their message out. This is uncharted territory, and there are skeptics out there who believe that the ESPN-UT deal is too long a commitment and fraught with peril. But the partners involved in the project both have a long history of success and they have a plan they believe will set the pace for others to follow.
It all kicks off in just five months