Big Ten Athletics
Failure to Reach Agreement with Dish a blow to BTN
By John Porentas
Difficulties renewing the agreement between the Big Ten Network and Dish Satellite Network were in the news the last couple of weeks. The parties seemed on the brink of failure on at least two occasions, but interim agreements were reached leading to the impression that things were on the way to a long-term agreement. On September 8 the Big Ten Network issued the following statement.
"Big Ten Network and Dish have come together to reach an agreement in principle for Dish to continue carrying BTN. We expect to finalize a long-term agreement soon and we thank fans for their patience."
Just a week later however, it turns out that was not exactly the case. Late last night the Big Ten Network issued the following unexpected statement.
"As of September 14th, BTN’s distribution agreement with Dish expired despite our best efforts to finalize an agreement.
"We are disappointed that Dish does not see the value in the network in the same way that so many of their customers do, including Big Ten students, alumni, fans and viewers across the country who continue to pay Dish for a channel they no longer receive."
The reason for the rift - and failure to reach an agreement- is as yet unknown, but it doesn't take a whole lot of imagination to come to the conclusion that at least one of the issues in play is price.
Distribution contracts in the cable/satellite industry usually involve a year-round monthly fee for each person in the footprint of the cable company or each subscriber to a satellite system. Assumedly, Dish decided that the fee asked by BTN was larger than the value BTN brought to Dish and balked at the renewal.
The unexpected announcement, and the timing of it, does not allow for comments from either Dish Network or BTN as yet, but despite BTN's attempt to characterize the failure to reach an agreement as a loss to fans, it is likely to be a much larger loss to BTN.
The Big Ten Network is very dependent on subscription fees from cable and satellite companies for it's revenue. The largest portion of its income is derived from those fees as opposed to advertising revenue. The failure to reach an agreement with Dish will leave a significant hole in BTN's cash flow, and there's more.
While ad revenue is not yet the major component of BTN's income, it has been the leading contributor to its revenue growth in the last several years.
Advertisers considering BTN will now view it as a network with smaller distribution, or in industry parlance "reach", so advertising sales will be tougher, and rates are likely to be lower.
Additionally, ad deals made for the current season could possibly also be affected. Ad purchase prices are determined by expected distribution as quoted by the seller of the ad time. If BTN's rates to advertisers this season included numbers reflecting distribution by Dish, advertisers could clamor for a reduction in rates leading to an additional revenue hit for the network.
The failure of BTN and Dish to reach an agreement could have far-reaching implications. BTN blazed the trail for the establishment of other conference networks. The outcome of this situation could mean that other conference networks can expect similar pushback from Dish and other cable and satellite companies.
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