For the first one, while streaming exclusive is in the near future, it’s not here yet, and so Cable viewers are what’s driving current revenue. It’s why Rutgers was added to the B1G 10 years ago. If the same decisions were being made now and we were in the AAC the last 10 years we would not be headed to the B1G in this next round. Expansion is for looking at the next 10-20 years not the previous 10-20.
On #2, yes lots of eyeballs in the biggest markets. Do the local teams dominate the local markets? Yes and no. If that was important, San Diego State (#8 sized city) and SMU (Dallas #9) and Houston (#4) would have been in Power conferences 10 years ago. Alabama would be hung out to dry, what market are they in? Tuscaloosa, Birmingham, Montgomery? The national eyeballs are what drive it. And even more so once streaming fully takes over in 5-10 years and it doesn’t matter where your campus is
I have been hearing that "streaming exclusive is in the near future" for quite a while now, and yet I see no evidence that that is the case. Streaming providers either don't have the money or are unwilling to spend it to compete with the cable/satellite providers. In addition, cable/satellite providers have been successful in selling internet, either as a package with TV and phone, or stand alone. It is getting to the point for many people that you can't have streaming without a cable service. At some point cable companies can just increase their internet fees and reduce their TV fees to lock out the streamers. Finally, with high speed fiber optic cable direct to my house, I don't care if the internet is down or bandwidth is reduced. The predictions of death of cable/satellite is just a bit premature and may never happen.
Part of your argument is how you define a "market". I know there are defined TV markets for ratings purposes, but your argument wants to make the leap from local markets (Alabama, etc.) to national markets. College sports are actually a regional market. The SEC in the southeast, the Big Ten in the mid-west plus, etc. For instance, Alabama dominates in the Atlanta market, but is a blip in Los Angeles. Th Chicago market is the same for the Big Ten, LA wherever USC and UCLA are. Your examples of SMU, Houston and San Diego State, fail because, even though they are in large markets, they don't dominate those markets and can't bring those eyeballs with them.
You have fully bought into the streaming thing and the demise of cable/satellite. You have not evaluated the strength and weaknesses of each very well. The hundreds of millions of dollars (maybe billions) of cable/satellite infrastructure are not going away, in fact it has been seriously upgraded in the last few years by companies who do not seem to be worried about their demise. The fact that cable/satellite companies continue to raise their rates, as opposed to reducing them, are the best indication that they are not worried. When/if I see cable/satellite companies reducing their rates to compete with streaming then I will become a believer. Also when/if I see streamers compete for conference contracts, that will also be a sign. The one point that you fail to mention is for streamers to dominate college sports, one of two things has to happen; either the networks have to give up their best content or continue to outbid the streamers, or the streamers have to be willing to pay carriage fees to the networks which will price them out of the game. The bottom line is that for your scenario to happen, streamers have to beat out ALL the cable/satellite providers and ALL the networks currently paying billions for conference carriage rights. So far, there is no indication that any of the streamers have the desire or the ability to do so.
Finally, I don't like the cable/satellite fees any more than anyone else. I have seriously looked into streaming as a replacement several times. I have a list of 40 channels that my wife (mostly) and I watch on a regular basis. I have yet to find a streamer that provides all of those channels, and when I add high speed (streaming speed) internet to the cost of streamers for even most of those channels, the total is not that much less than the cable/satellite providers. When is this going to change?