College Football’s 2020 Season Sputters, With $2 Billion in TV Ad Revenue at Risk

In the wake of two major conferences deciding to forgo fall sports, the quickly-approaching college football season remains shrouded in doubt and uncertainty, even as three other top conferences are planning to play through a coronavirus pandemic that is still making its way through the country.

But can you have a college football season if 40% of the schools aren’t involved? The TV industry has billions of dollars riding on that outcome. How much? Last season, college football generated $1.7 billion in advertising revenue, according to research firm Kantar Media, with AT&T alone accounting for some $70 million of that.

The return of professional sports in recent months has helped the TV business salvage a small piece of the economic wreckage caused by the global pandemic. This fall was supposed to continue that momentum. Both the NBA and NHL will crown their champions this autumn — when each league would normally be ramping up for the start of the upcoming season — which was supposed to coincide with the start of football season.

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But while the NFL appears on its way for an on-time kickoff, college football’s hopes took a major sack this week when the Big Ten and Pac-12 conferences punted their fall sports into next year due to the still-very-much-spreading virus.

The two conferences are part of the so-called “Power 5” in the NCAA, featuring heavyweight programs like USC, Stanford, Oregon, UCLA, Michigan, Ohio State and Penn State. Smaller conferences like the Mountain West and Mid-American Conference (and a few other individual schools) have also called off their fall seasons. All told, that’s 53 schools that will not be competing this fall, which still leaves 77 teams to compete for berths in major Bowl games and the College Football Playoff.

But the Big 12, SEC and ACC are still planning for a fall season, even as they realize the virus will ultimately make the final call. In announcing its intentions to go forward with its season this fall, which came one day after the Big Ten and Pac-12 made their decisions, Big 12 board of directors chairman and TCU Chancellor Victor Boschini, admitted, “If at any point our scientists and doctors conclude that our institutions cannot provide a safe and appropriate environment for our participants, we will change course.”

Media companies that broadcast sports are coming off a rough earnings quarter, when the virus slammed headfirst into their balance sheets. Disney took the biggest hit ($4.7 billion to be exact), while its media networks revenue decreased 2% primarily due to lower ad sales. Meanwhile, Fox saw a 22% dip in its advertising revenue — and warned further sports cancellations, like the ones happening across college football, would batter its earnings even more. ViacomCBS, which airs SEC football and a few other highly-prized games like the annual Army-Navy match-up, saw COVID-19 drag its ad sales down by 27% in the quarter.

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“My hot take is that the SEC and ACC will play along with Big 12,” Patrick Crakes, a former Fox Sports executive who now works as a sports media consultant, told TheWrap. “They may push the season start a month or two, but they’ll play.”

Even just the SEC holding its season could be enough, Crakes argues. “I think you can go on with one conference. And I doubt the SEC cancels,” he said. The SEC is wildly considered to be the most competitive, and most popular, football conference. CBS’ national SEC slate on Saturdays has been the top-rated college football college package for the past 11 years.

Losing two of the five power conferences throws a financial wrench into the mix, particularly at ESPN and Fox.

The Big Ten and Pac-12 collectively earn nearly $700 million a year in TV rights, which are spread between Fox and Disney (CBS has a basketball-only rights deal with the Big Ten). Over at Fox, the situation looks particularly dire. Not only do the Big Ten and Pac-12 make up the majority of the company’s football programming — Fox was primed to air both conference’s title games this December, though it does have some Big 12 rights — but Disney will likely be able to make up for some of that with the extension of the NBA’s season into the fall.

“It certainly helps, although the nature of some college football advertisers means there isn’t exactly a direct 1-to-1 fit,” Crakes argues. “Both the NBA and Power 5 college football are Tier 1 TV sports and share many audience characteristics, but there are important differences which matter to some advertisers. Without a doubt, though, some college football ad money would find its way to the NBA, but the truth is you can’t replace the lost college football inventory.”

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It’s not only ESPN and Fox that are likely to feel the financial pain. Four of the five Power conferences have their own cable networks. The Big Ten Network (which Fox owns a 49% stake in) and Pac-12 Networks, which are owned by the conference, have a lot riding on the ability to have some kind of spring college football.

After all, college sports networks need sports to keep them in business. Without it, pay-TV providers like DirecTV or Comcast may wonder why they’re even paying to offer these channels to their subscribers.

“If these respective conferences can play their fall games in the spring, there may be little, if any, impact on their network financials. If the fall games can’t be played at all, these networks would then need to offer revamped fees, contractual terms or rebates to their distributors,” said Lee Berke, president and CEO of sports consultancy LHB Sports. “Under the latter scenario, financial performance for these networks would be harmed, but not irreparably so.”

Crakes agrees that these networks would be able to survive what figures to be a difficult rest of 2020, if not longer, but it will hurt, especially if TV distributors demand their money back.

“They’re not going to shut down, but this is going to a difficult six months to a year for them. They have no content and will have little to no advertising revenue,” he said. “The big question is what do distributors do with sub fee payments to them. Theoretically, a lot of those planned-for payments (a majority of each network’s revenue) could go completely away.”

As it stands now, college football will have a bifurcated season, which throws into question whether Bowl season and the College Football Playoff can be staged during its normal December-January timeframe (Ohio State, which made the Playoff last year, would not be eligible as part of the Big Ten). The Rose Bowl is scheduled to host one of the semifinal games in January, but the organization that puts on the corresponding Rose Parade canceled the annual New Year’s Day event, which threw the game in doubt.

But ESPN has $470 million reasons to forge ahead with a College Football Playoff, even if half the teams aren’t eligible. Last year’s National Championship game between Clemson and LSU drew north of 27 million viewers, numbers only rivaled by the NFL and, occasionally, the NBA Finals.

“You can actually have them play with just the SEC, ACC and Big 12,” said Crakes.

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