ESPN3 is the ACC network and that's the problem

The ACC seems vulnerable and is dealing with unhappy members because of the new TV deal. All the gripes relate to money and third tier rights. As with most unhappy partnerships both sides are not seeing the value of the other. ESPN and the ACC can make ESPN3 one of the most viable new distribution platforms in TV and the Internet. But to do so, ESPN needs to revise the ACC deal again and pay a premium for the ACC's third tier rights.

ESPN3 is the perfect network

New sports networks have had varied levels of success in their distribution. ESPN3 hasn't had the same political or financial hurdles because they are dealing with Internet Service Providers and not cable and satellite companies. Most major ISPs carry the network and have for a few years.

I've complained like everyone else about having to watch games on my laptop, but technology is making that less of an issue. There are a variety of streaming devices and gaming systems that enable putting ESPN3 on a big screen. As ESPN continues to invest in ESPN3 the production quality will be as good as any traditional channel and seamless from a Big Ten Network or Pact 12 Network production. And unlike those other networks, ACC content would be still within the ESPN network so the conference will benefit from ESPN's cross promotion and massive audience.

ESPN can make ESPN3 the biggest Internet Channel available. It can be bigger than Hulu or MLBTV. And that is big for the ACC. While the other college networks can pushed to a sports tier, the ACC can be the center piece of ESPN's biggest innovation since ESPN2.

ESPN3 is not a money machine

Where the ACC suffers is in revenue allocation from ESPN3. The Big Ten Network collects approximately $1 per cable subscribers in Big Ten markets. ESPN3 collects an undisclosed amount per ISP subscriber for ESPN3. But regardless if ESPN3 collects $1 per subscriber, that money is not exclusively for the ACC. Why share all that revenue with the ACC when EPSN can claim that some of those subscribers are more interested in the other programming on ESPN3 like soccer or tennis or auto racing? If the ACC had its own network or had built one with the Pac 12, that revenue division would be less opaque.

Now ESPN has plenty of cash. They have their cable revenue and enormous ad sales that the Big Ten or Pac 12 networks cannot approach. With that track record and advantage, ESPN will probably turn ESPN3 into a cash cow too. But because it's not one now, the ACC suffers.

ESPN needs to save the conference

I am sure ESPN viewed their new deal with the ACC as fair. Since they were bidding against themselves, I imagine they didn't feel the need to break records. But that conservative approach clearly backfired. Florida State is unhappy and ready to join the Big 12. Some would say that ESPN doesn't care, because as a member of the Big 12, ESPN would still have rights to plenty of Florida State games. But if ESPN let's Florida State leave they will be losing a valuable asset. The ACC is exclusive to ESPN. That bond should have a premium.

We'll find out more about the ACC's future this summer. The likely outcome is a breakup. I hope everyone slows down, because the ACC's partnership could be fantastic. But no one seems to see the big picture.