The Pac-12 Networks are "shrinking in reach and drastically underperforming revenue expectations," according to The Seattle Times.

Information obtained by the paper's Pac-12 Hotline sheds unprecedented light on the financial realities of the conference’s wholly-owned media company. Jon Wilner writes that some schools are receiving annual payouts from the networks that are a fraction of what they'd hoped for — and a fraction of what has been reported in the media — when the real cost of the content is included in the calculation.

"From Day One, I worried about them having all those channels and having to produce all that programming," said USF sports management professor Dan Rascher, referring to the seven feeds (one national, six regional) and 850 live events per year. "That's crazy hard to do without spending a lot of money on a lot of programming with low value."

According to a source who attended a Pac-12 Networks pre-launch presentation, projected annual per-school payouts ranged from $3 million to as much as $10 million. But after six payout cycles, the networks have yet to even hit the low end of that range, according to financial information obtained by the Hotline.

Limited reach is another concern among athletic department officials within the league. "We've got to get eyes on the product,’" Washington State football coach Mike Leach told the Times. "It's about exposure and money, and you don't have one without the other."

Now in their seventh year, the networks should be building their audience or at least holding steady. However, information provided to the Hotline by media research firm SNL Kagan indicates the Pac-12 Networks have lost seven percent of their audience since peaking in 2016, with much of the decline attributed to the discontinuation of service on U-verse last year.

The Pac-12 Networks currently have just 17.9 million subscribers. By comparison, the Big Ten and SEC networks have three or four times the audience and are believed to generate three or four times the revenue for their respective member schools. Wilner reports that the disparity is due, in part, to contrasting business models. The Big Ten and SEC partnered with Fox and ESPN, respectively, which gave them leverage in negotiating distribution deals. The Pac-12, which has a smaller population within its footprint, lower ratings for its games and less fan affinity, eschewed a partner and retained 100 percent ownership.

Pac-12 commissioner Larry Scott and campus officials maintain hope that having full control of their content will prove visionary when the conference renegotiates its media contracts in several years.

Paul Steinbach is Senior Editor of Athletic Business.