Most people will answer with an unequivocal, "yes," but let's not be hasty.
In this article, Jon Wilner provides some recently released numbers from 2015. The network had revenue of about $117 million, up about 9.5% from 2014. The network distributed to the 12 schools a total of about $17 million. Does that mean the network's expenses were the $100M difference? Wilner says, "no" and estimates that expenses were probably in the low $80M neighborhood.
So taking these numbers, let's do a little math and try and estimate the value of the PTN. Let's assume these revenue and expense numbers are in the ballpark. That means the PTN made a "profit" of about $37M in FY15. What sort of multiple should we place on this figure to arrive at a value? Clearly the PTN is still in the startup phase and expenses as a percent of revenue are likely to come down, or in other words profitability will rise. The PTN still has some growth potential ahead of it whether it's from contracts with distributors like DTV, partnering with the Big 12 or through it's own "over-the-top" distribution. This is where financial analysis becomes more art than science but I'm going to put a multiple on the PTN's earnings of 20 and arrive at a value of app. $750M for the PTN.
As everyone knows, the PAC-12 decided to maintain 100% ownership in the PTN. If they had elected to sell half the network for yearly fees, the PAC's distribution to each of its schools would be much higher. Instead, each of the 12 schools kept their share of half a $750M asset or about $31M per school.
Conclusion: Before getting too negative on financial comparisons between the PAC, SEC and Big Ten, remember that our conference owns a valuable asset and hasn't sold control over it to a member of the TV distribution industry whose business model is undergoing competition from a disruptive technology.
In this article, Jon Wilner provides some recently released numbers from 2015. The network had revenue of about $117 million, up about 9.5% from 2014. The network distributed to the 12 schools a total of about $17 million. Does that mean the network's expenses were the $100M difference? Wilner says, "no" and estimates that expenses were probably in the low $80M neighborhood.
So taking these numbers, let's do a little math and try and estimate the value of the PTN. Let's assume these revenue and expense numbers are in the ballpark. That means the PTN made a "profit" of about $37M in FY15. What sort of multiple should we place on this figure to arrive at a value? Clearly the PTN is still in the startup phase and expenses as a percent of revenue are likely to come down, or in other words profitability will rise. The PTN still has some growth potential ahead of it whether it's from contracts with distributors like DTV, partnering with the Big 12 or through it's own "over-the-top" distribution. This is where financial analysis becomes more art than science but I'm going to put a multiple on the PTN's earnings of 20 and arrive at a value of app. $750M for the PTN.
As everyone knows, the PAC-12 decided to maintain 100% ownership in the PTN. If they had elected to sell half the network for yearly fees, the PAC's distribution to each of its schools would be much higher. Instead, each of the 12 schools kept their share of half a $750M asset or about $31M per school.
Conclusion: Before getting too negative on financial comparisons between the PAC, SEC and Big Ten, remember that our conference owns a valuable asset and hasn't sold control over it to a member of the TV distribution industry whose business model is undergoing competition from a disruptive technology.
