College Football Postponements Jeopardize Fox, ESPN Ad Bonanza

Ohio State receiver Chris Olave was defended by Wisconsin’s Caesar Williams during the Big Ten’s championship game in December, which Fox carried.

Photo: Joe Robbins/Getty Images

Walt Disney Co.’s ESPN and Fox Corp. stand to miss out on hundreds of hours of Saturday sports programming and big chunks of advertising revenue this fall if the bulk of college football’s season doesn’t happen until next year.

The Big Ten and Pac-12 conferences, which have deals with the networks, on Tuesday voted to postpone college football and other fall sports because of the coronavirus pandemic, a move that could prompt other high-profile conferences to follow suit.

“The season is clearly in jeopardy,” said Patrick Crakes, a sports-media consultant and former Fox Sports executive. Mr. Crakes said the networks that rely heavily on the Big Ten, Pac-12 and other conferences that are postponing their seasons are at risk of losing more advertising revenue than rivals that still have college football games to show this fall.

Fox and ESPN have multiyear TV rights for Big Ten football games and Pac-12 football and basketball, for which they paid a combined $5.64 billion. Fox also owns 51% of the Big Ten Network, a 24-hour channel that shows games and highlights from Big Ten games. FS1 and FS2, cable networks owned by Fox, also carry college football games.

Fox and ESPN declined to comment. Fox Corp. and Wall Street Journal parent News Corp share common ownership.

The unwieldy structure of college football complicates matters for TV networks. Ten athletic conferences and a handful of independent schools—not the National Collegiate Athletic Association—control TV scheduling for top-division football, including postseason competition. A public debate over the fate of the season is raging, with players, commissioners, coaches and fans weighing in just weeks ahead of traditional kickoff dates.

Some major conferences are still planning to begin their football season this fall. The Southeastern Conference, which has rights deals with ESPN and ViacomCBS Inc.’s VIAC -1.02% CBS, hasn’t postponed its season but did reduce the number of games it plans to play. The Atlantic Coast Conference, which has a long-term rights deal with ESPN, on Tuesday said it would “stay flexible and be prepared to adjust as medical information and the landscape evolves.” The Big 12, which also has a rights deal with ESPN, on Wednesday unveiled a revised football schedule for the fall. “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,” the conference said.

If other powerhouse college football conferences join the Big Ten and Pac-12, it would further jeopardize a bounty of ad dollars for major TV networks. Advertisers spent $1.16 billion on national TV advertising for college football games in the 2019-2020 season, according to data firm Standard Media Index. Regular-season games generated $418 million for ESPN and $165 million in ad revenue for Fox during that period. Ad revenue from postseason games was about $389 million, with about $85 million generated by the national championship game, shown by ESPN.

Ad buyers say they expect to move college football investments to other live sports, such as the National Football League, assuming the pro games are played. “In the back of our minds we were always thinking, ‘Hey there’s a better chance that something happens with a college football cancellation than NFL,’ ” said David Campanelli, chief investment officer at Horizon Media.

Some clients have already said they want to withdraw their ad dollars if college football doesn’t happen, while others will want to redirect the spending to other Disney properties or the NFL, said Carrie Drinkwater, executive director of investment at ad-buying firm Mediahub.

A postponed college football schedule will further diminish the appeal of live TV, with sports being one of the few remaining aspects of cable programming that hasn’t been supplanted entirely by video-streaming services. Traditional pay-TV subscriptions fell by about two million in the second quarter of the year, according to research firm MoffettNathanson, reducing cable and satellite penetration to levels not seen since a quarter-century ago.

ESPN runs college football games on Thursday nights and throughout the day on Saturdays during college football season, with Fox broadcasting games on Saturdays, so filling the airtime will be a challenge. Networks could explore filling those time slots with sports that were postponed until the fall because of the pandemic, including golf and tennis tournaments or MLB games, according to a person familiar with the matter.

The potential postponement of the bulk of the college football season also could affect affiliate agreements, lucrative deals that pay-TV providers such as Comcast Corp. CMCSA 0.81% and Charter Communications Inc. CHTR 1.40% sign with major TV networks like ESPN and Fox to show games to subscribers.

The agreements allow pay-TV providers to reduce their payments to networks in the event fewer games are delivered, according to people familiar with the deals. The networks, in turn, can reduce their payments to college-football conferences, the people said.

Whether that happens depends, in part, on the number of games still available to each network and the relationships between pay-TV providers, networks and football conferences, the people said.

The parties have overlapping business interests, so they have an incentive to find a solution that preserves their relationship for the long haul. Conferences and TV networks could offer to extend their contracts for a year with no additional payment, for example, or provide programming at a reduced rate.

Write to Benjamin Mullin at [email protected] and Alexandra Bruell at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8