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New ACCN Revenue Estimate: Close to $10M/school

[Note: this article first appeared on ACCFootballRx and is reprinted here with the author's permission - Hokie Mark]

money talks

The ACC Network has signed up many millions of customers since my last revenue estimate - in fact, it's almost doubled since then - so it's high time for an update...

SUBSCRIBERS

The ACCN is now available to about 70 million customers. We'll estimate that about half of those live in the ACC footprint (if we include Indiana), which is 35M. We'll also assume that about 80% of cable customers within the footprint will actually get the ACC network, but we'll only count on 20% out of footprint.

In footprint: 0.80 X 35M = 28 million subscribers.

Out of footprint: 0.20 X 35M = 7 million more (35M total).

MONTHLY RATE

According to an article posted by Multichannel.com:

The ACC Network -- which industry sources say costs around $1 for distributors within the ACC Conference footprint and around half that outside the footprint

I'm going to question that $0.50 per sub out of footprint and go with $0.25 instead. Using the above numbers, we get...

In footprint: 28 million subs X $1 = $28M/month

Out of footprint: 7 million X $0.25 = $1.75M/month

Combined estimated monthly rate: $29.75M/month

GROSS REVENUE

The ACCN didn't launch until September 22nd, and the ACC's fiscal calendar runs from July 1st through June 30th - so year one is really just 85.5% of a full year. That gives us a gross year one revenue stream of

12 months/year X 0.855 X $29.75M/month = $305M/year

That's still a pretty big number, but I haven't subtracted any operating costs associated with the ESPN side (it's not really 100% profit!) Unfortunately, I can only guess here - let's say it costs $2M/month to operate? So let's subtract another $24M, leaving us with $281 million net.

REVENUE SPLITS

Finally, let's assume that ESPN and the ACC split that money 50/50. I've seen arguments that maybe the ACC would not get half because it lacked contract leverage, but that is offset by the huge upfront investment that the ACC schools have made (something SEC schools, for example, did not do), so I'm sticking with 50/50 for now:

$281M/year / 2 = $140.5 million/year

Of course, the ACC must split its half between the conference and the 15 schools. If we make another conservative assumption - that the ACC keeps an equal share (it won't be more than that) - then we must split it 16 ways:

$140.5M / 16 = $8.78 million/year/school

That's actually right in line with the estimates tossed out by much-maligned FSU AD Stan Wilcox.

It's also in line with the budget projection put out by Clemson AD Dan Radakovich - but well ahead of schedule, of course.

LOOKING AHEAD

The 2020-21 school year figures to be a full 365 days of ACCN revenues, and the number of subscribers is likely to keep going up (with the potential to nearly double the current number once the other TV providers sign up). That could bump the revenue up as high as $10.5 million per school per year. And keep in mind - this is all without Comcast, which will probably sign up by 2022 or 2023 - which raises the ceiling even higher.

All things considered, I expect this is going to prove very, very profitable for the ACC!

What are your thoughts? Do you see an error in my calculations? If so, please leave a comment!