NFL TV rights in a changing world: Barron’s details current deals and explores the league’s media future

This past weekend, as the NFL was preparing to launch its 100^th season, Barron’s ran a wonderfully detailed profile of the NFL’s television packages.

Football Season Is Here and It’s a Key Moment for the Future of TV (subscription required)

The in-depth piece serves as a handy scorecard of data covering current rights fees, television revenue figures, the current breadth of packaging and digital and tentacle engagements. The author Jack Hough also explored in broad view where the league might head in its next set of negotiations.

These are my bullet-point takeaways and comments:

              Over the-air television

• Live sports are more important to television operators than ever before because the competition for scripted programming is aggressive. Netflix, among others, fights for viewers’ eyeballs at every waking hour.

• The NFL rules television. About 60% of the top 100 most watched telecasts in a typical year are NFL games. The number is 70% in years with no Olympics. (every other year)

• NFL viewership is down 11% since 2011. Not good, but still better than television overall which is down a whopping 40% in primetime.

• Collectively, the financial investments by NBC, CBS and Fox, the three over-the-air networks carrying the NFL on Sundays, are essentially flat.

• Each of the Sunday partners generates about $1 billion in annual ad revenue for their NFL broadcasts.

• The current rights deal with the league’s over the air network partners runs through the 2022-23 season. ESPN’s rights to Monday Night Football will expire a year earlier, at the end of the 2021-22 season. So, NBC, CBS and Fox have four seasons left and ESPN has three.

• The total number of dollars that NBC, CBS and ESPN spend with the NFL is $42.7 billion.

• There’s the intangible. Win, lose or draw, the networks use the big NFL audiences as lead-ins, promoting other programming like CBS’ 60 Minutes.

• The over the air networks in particular use the large viewership to extract higher retransmission fees from their affiliates. ESPN does so to justify high per subscriber monthly feels from their regional and national cable distributors.

• As published elsewhere, ABC (Disney) would like to figure out how to get a slice of the NFL package.

• According to Hough, the NFL might also package off-U. S.-soil games, those in London for instance, and sell them to a pursuer. A London game in 2017 was run by Yahoo.

Digital

• Tech companies can rear their cash-filled pockets to make a run for rights.

• Amazon’s Thursday Night rights which is available to its Prime customers attracted 500,000 viewers. The same game carried by Fox and distributed by the NFL Network, averaged 14.3 million and 6.6 million viewers respectively. Remember that Amazon produced its game coverage independently, with their own set of announcers, Hannah Storm and Andrew Kremer. Amazon’s hope was to attract women who are more active online shoppers.

• Why would the participation by technology companies increase the league’s revenue? Amazon paid $4 per viewer hour. ESPN paid half, $2. In other words, technology companies will likely pay more for the same NFL programming segment than traditional broadcast or cable players.

• It was suggested that technology companies are hamstrung to compete for rights because they lack the professional wherewithal to produce major sports broadcasts. They’d have to develop sports production units from scratch, in a manner similar to what Fox did in 1994 after winning a staggering bid for the league’s NFC package. Through it, David Hill, ex-Fox Sports head, became an industry household name. Frankly, in my view, staffing up won’t stand in the way of aggressive and savvy tech companies.

• The NFL smartly has always positioned its television by attracting more bidders than there are packages available for sale. In other words, there are more customers than product. The last time the NFL added a new scheduling segment was in 2006, scheduling games on Thursday nights. The league did so to build awareness for its newly launched NFL Network which ran the gamecasts. Today, less program segmentation leads to brisker bidding. It also eliminates an oversaturation of games. (There are two Sunday afternoon packages, Fox has the NFC and CBS has the AFC. NBC has Sunday nights and ESPN Monday nights. Then’s there’s the Thursday night package, shared by Fox, the NFL Network and Amazon Prime.)

More:

• Betting should help build viewership especially in blow outs; not only for the over/under of the final score or the margin of victory. Independent one-off bets, call it exotic wagering, will keep viewers’ eyes glued too, e.g. points per quarter, number of times third downs are executed satisfactorily and the like.

• The out-of-market rights NFL Sunday Ticket, currently owned by DirecTV (parent is AT&T) run through 2022. But the NFL has an opt out clause next year. Barron’s suggests that the league could sell these rights to a digital company or for that matter to ESPN’s aggressive streaming service. Yes, the number of rights-players and options are blossoming.

• Verizon has the exclusive mobile rights through a five-year $2 billion deal.

Fluid:

• The league’s collective bargaining agreement with its players might weigh on future negotiations. The deal expires at the end of the 2020-21 season. One of the major components that will be in-play is expanding from 16 to 18 regular season games. Doing so could swell the NFL coffers further.

Unsolicited note:

On more than one occasion, I have suggested Barron’s to my three children and at times gingerly to their better halves too.

Alan Abelson wrote the lead column for decades until a short time before his death at age 87 in 2013. Randall Forsyth has done an excellent job succeeding Abelson, writing the time-tested Up and Down Wall Street column.

Suggestion: When reading Barron’s, you’ll likely run into economic and market references that are unfamiliar. Don’t allow it to thwart your appetite to complete the read.  Just Google terms with which you’re unacquainted and in most instances, you’ll understand the drift of the piece. Go for it! You’ll be better off for it.