With upheaval in cable market, Power 5 bet on Silicon Valley to keep rights revenue flowing

[Rufus]

Really interesting article on the possible future of media rights...........

Power 5 counting on Silicon Valley to keep them rich

The one story any Nebraska or Big Ten football fan should read

"
Staples talks to conference commissioners, including the Big Ten’s Jim Delany, about the eventuality of selling broadcast rights beyond cable — so be sure to read the whole thing. But I’ll isolate this particular paragraph for consumption:


If Amazon were to buy the Big Ten’s Tier 1 rights — meaning you’d need a Prime membership to watch Michigan-Ohio State or Nebraska-Wisconsin — that could mean millions of additional members who might eventually spend thousands more a year. Fox’s new six-year deal with the Big Ten will pay the league an average of $440 million a year for those rights. If Amazon paid $500 million a year for the same thing and it netted two million new Prime members who then spent an average of $1,500 more per year on Amazon than when they were non-members, Amazon would do an additional $3 billion in sales."

 

[pj]

I’ll isolate this particular paragraph for consumption:


If Amazon were to buy the Big Ten’s Tier 1 rights — meaning you’d need a Prime membership to watch Michigan-Ohio State or Nebraska-Wisconsin — that could mean millions of additional members who might eventually spend thousands more a year. Fox’s new six-year deal with the Big Ten will pay the league an average of $440 million a year for those rights. If Amazon paid $500 million a year for the same thing and it netted two million new Prime members who then spent an average of $1,500 more per year on Amazon than when they were non-members, Amazon would do an additional $3 billion in sales."

Amazon's margins are 1%, so that $3 bn in sales would bring them $30 mn in profit, purchased at a cost of $500 mn. There's also the Prime fee of $75 for $150 mn. It looks like a money-losing proposition.

 

[Seaa Blue]

As soon as Amazon owns the market (see Sears, Macy's, JCPenny) that 1% will go up. Nothing like being able to decide how much you would like to make. On the supply side, the Amazon "generic" brand will keep the suppliers honest. Drones will probably even be delivering pizza.

 

[c29328]

As soon as Amazon owns the market (see Sears, Macy's, JCPenny) that 1% will go up. Nothing like being able to decide how much you would like to make. On the supply side, the Amazon "generic" brand will keep the suppliers honest. Drones will probably even be delivering pizza.

That's the narrative where we are all the Wiley coyote calling acme for everything. It could be crappy for the consumer. But at least I don't have to go to the mall.