On Aug. 26, 2011, the Longhorn Network, a joint partnership of Texas and ESPN, launched to equal parts acclaim and controversy. ESPN had inked a 20-year deal that guaranteed Texas $300 million for the newly christened LHN, an average of $15 million a year over the life of the partnership. Texas Longhorn administrators and fans heralded the new network as the product that would make Texas a truly national brand. Sportswriters wrote feverish columns speculating on who the next school to follow in the Longhorn footsteps and launch its own network would be. It was truly a proud day for Longhorn supporters — the beginning, they believed, of a generation of dominant athletics.
But the rest of the Big 12 eyed the new network apprehensively. Having recently chosen not to join the Pac-10’s audacious expansion bid to 16 schools, Texas had driven a high price to remain in the Big 12 — the Longhorn Network was its prize. While ESPN has received much of the criticism for the LHN’s launch, if ESPN hadn’t partnered with Texas on the channel then it’s likely Fox or Comcast or another major media company would have stepped up to launch the channel. Those other companies may not have paid as much as ESPN, but one thing was certain — if the Longhorns were staying in the Big 12, Texas was going to have its own network.
So as we near the four-year anniversary of the network’s launch, it’s worth asking: How’s the Longhorn Network doing?
The answer depends on who you ask.
According to SNL Kagan, the Longhorn Network now has 6.5 million in-state subscribers paying an average rate of .29 a month. Based on SNL’s numbers, that means in 2015 the Longhorn Network will bring in $22.6 million in revenue from those 6.5 million subscribers in Texas. ESPN doesn’t comment on particular revenue numbers for channels, but ESPN says the LHN actually has 20 million subscribers. That’s a big difference in subscriber numbers, but when you parse the difference between those subscriber numbers, the revenue isn’t much different. That’s because, according to SNL Kagan, all of the national subscribers outside the state of Texas — that’s roughly 13.5 million subscribers — are paying $0.02 a month, or $0.24 a year, for the Longhorn Network. Those 13.5 million subscribers would add just $3.2 million more a year in revenue, meaning after four years the Longhorn Network is still just doing $25.8 million a year in revenue. (Putting that number in a sports TV context, the Longhorn Network is on pace to do less revenue in 20 years than Mayweather-Pacquiao did in one night of pay-per-view boxing.)
Given that ESPN has guaranteed Texas in the neighborhood of $15 million a year and the costs to launch and run the network were substantial, this also means ESPN has lost money every year the Longhorn Network has existed. Those losses likely run into the tens of millions of dollars so far. And while the Longhorns were guaranteed a payment that averages $15 million a year and ESPN isn’t bouncing checks, the rumored millions of additional dollars that could materialize from a successful network are not ever going to arrive.
There are roughly 100 million cable and satellite subscribers in the country, and just over 6 percent of them are paying more than a quarter a year for the LHN, according to SNL Kagan. Even by ESPN’s own internal numbers a tiny segment of the cable and satellite audience has access to the channel. That’s disappointing for Texas, because the Longhorn Network was launched as a major national recruiting tool. The Longhorn Network was also supposed to make Texas a national brand. Unfortunately for Texas, the SEC Network is in 69 million paying homes. The Big Ten Network is in 62 million paying homes. And all of those subscribers are paying a lot more than a quarter a year to the conferences.
Why has the Longhorn Network been the farthest thing from must-see television in cable sports history? It’s the programming, stupid. ESPN and Texas gambled that a couple of football games, a bevy of other less popular sporting events and rabid coverage of their local team would be as popular as oil in the Lone Star State. The problem was this: Even the most diehard Texas fan can watch only so many softball games and swim meets. Football’s the life blood of televised college sports. And the Longhorn Network never had enough football to get fan demand stoked to a high level. This was a dry oil well priced as a gusher.
Indeed, the biggest irony of the Longhorn Network is this: In deciding to create its own channel, Texas made much more money for two Big 12 schools that left for the SEC — Texas A&M and Missouri — than it’s going to make for itself. That’s because both Texas A&M and Missouri stand to make much more money off the SEC Network than Texas will ever make off the Longhorn Network. Nebraska, in the Big Ten, will also be making more television money than Texas.
And here’s the craziest fact of all: If the Longhorn Network hadn’t existed, then the SEC Network wouldn’t have existed either. Without Texas A&M leaving for the SEC, the SEC’s own network wasn’t lucrative enough to undertake. It was the eight million cable and satellite subscribers in Texas that made the SEC Network financially viable. Here’s some simple math for you: Every major cable and satellite subscriber in Texas pays around $16.80 a year for the SEC Network. Every major cable and satellite subscriber in Texas — except for those with Comcast, which doesn’t carry it — pays $3.48 for the Longhorn Network. So right now in Texas, the only state paying more than a quarter a year for the Longhorn Network, the SEC Network makes nearly five times as much every month. (Nationwide the SEC Network, on pace to do nearly $550 million in revenue this year, makes nearly 22 times as much money a month as the Longhorn Network.)
This means the Longhorn Network, launched to strengthen Texas’ competitive stature for a generation to come, actually strengthened its rivals more than it did Texas. The launch of the Longhorn Network was such a disaster that ESPN used it as a road map for what not to do when they launched the SEC Network. The result? The SEC Network was the most successful channel launch in cable history; the Longhorn Network remains the least successful cable launch in ESPN history. (If you want to give ESPN credit for playing grandmaster-level chess, did the network encourage Texas to start the Longhorn Network knowing that it would lead to the SEC Network, which will make hundreds of millions for ESPN? If so, that would be true genius level.)
Toss in the fact that TCU is now a member of the Big 12 — slicing into the recruiting base of Texas — and you’re talking about the Longhorn Network undercutting the Texas brand on all fronts. At least coaches aren’t complaining about all the obligations the network foists upon them and the competitive advantage it gives the rival coaches who watch it to glean scouting news.
Wait, they’re doing that?
As if that weren’t enough, the Longhorn Network also killed the Big 12’s chances of following in the footsteps of the Big Ten, the Pac-12 and the SEC and forming its own network — meaning, you guessed it, the Longhorn Network likely costs the other nine members of the Big 12 hundreds of millions of additional dollars over the life of its existence. All so Texas can reap the “benefits” of its own “national” network.
Want a final kicker? George Bodenheimer, the president of ESPN at the time of the Longhorn Network’s launch, just wrote a great book about his tenure at ESPN, which I’d encouage you to read. He covers just about every major decision that was made by the network over the past 35 years. He praises countless channel and product launches, from ESPN2 to ESPN Classic, ESPNNews to the SEC Network. He even devotes ample time to the launch of ESPN.com and to the disastrous ESPN phone launch.
He doesn’t mention the Longhorn Network in the entire book.
That’s because it’s the worst television programming decision in ESPN history. The Longhorn Network has already cost ESPN tens of millions of dollars, and that cable money pit appears to have no end in sight. Sure, no one is watching. But even worse, no one is complaining because they aren’t able to watch. The Longhorn Network proves that in today’s sports marketplace, there’s no room for single-team channels.
Despite all the pronouncements about how it was going to change college sports forever, in the end the Longhorn Network was all hat, no cattle.