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Blogging about college football by an Oklahoma Sooners fan.

The Business Model of the Longhorn Network

DeLoss Doods
With the start of Big 12 Media Days on Monday, if you didn't get your fill of talk about the Longhorn Network and the future of the conference last week, strap on the feedbag.

While the discussion has primarily focused on Texas trying to pull a fast one, Chip Brown of Orangebloods.com has suggested that much of the controversy has actually been ESPN's doing. Either way, it's an issue now that pretty much can't be avoided.

The reality is that ESPN and Texas are ironclad partners in this joint venture. Their interests may differ, but one can't really do anything without it affecting the other. So, let's take a quick timeout to discuss what's at stake for both parties.

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Texas gets a cool $300 million in the next 20 years and its own television network to promote its school and its athletic programs. Simple.

ESPN's intentions, to me, require more reading of the tea leaves. Obviously, the Worldwide Leader plans to make money off this; the question is how.

I don't claim to be an expert in the economics of the television, so it's entirely possible that Mickey can generate enough direct revenue from the LHN to make a profit. I'm skeptical, and I doubt I'm alone on that.

So, let's say the LHN can't pay for itself. What's the point?

In the last 18 months, it seems pretty clear that ESPN will pay significant premiums to maintain control over televising college football. To keep Comcast on the sidelines, for instance, ESPN teamed with Fox on the eye-popping contract given to the Pac-12 earlier this year.

By discouraging competitors from entering the industry now, ESPN can continue to gather assets and influence over the sport. Eventually, with no legitimate competition, the network will effectively have a monopoly on college football television.

Locking down the Longhorns' TV network gives ESPN control over the first university-branded channel, and it just so happens to be the premier brand in college athletics. It keeps other operators out of the market and shows other schools with designs on having their own network what ESPN can offer.

From that perspective, ESPN can consider losses on the LHN to be an investment in its future.

(In discussing this type of business model with Ripley of Barking Carnival the other night, the term I threw out was "loss leader." Technically, that's not quite right, but it's analogous.)

The kicker: ESPN is looking at a win-win situation. At worst, the network discourages competition. At best, it also makes some money directly off of the LHN.

Pushing to broadcast one of Texas' conference games and high school contests indicates that ESPN is proactively exploring ways to monetize its new venture. It should – that's why it exists. But that doesn't mean the rest of the league has to sit around and just let ESPN call all the shots to everyone else but Texas' detriment.

Last week's events proved that Oklahoma and Texas A&M do have leverage, at least for now, in the Big 12. All but the most blatant of homers would acknowledge that if Texas and ESPN weren't worried about OU and A&M leaving for the SEC – and possibly bringing Missouri and Oklahoma State along – Texas fans would be watching Johnathan Gray live on the Longhorn Network this fall, not next.