SBJ/September 1 - 7, 2003/Special Report

NFL Network seeks broad distribution

There's something about the letters N-F-L that can open doors and put a swagger in the step of anyone walking through them.

From one standpoint, the Nov. 4 launch of the league-owned NFL Network faces an array of hurdles. While nearly 11 million satellite subscribers are already lined up through a distribution deal with DirecTV, that agreement was tied to DirecTV's five-year, $2 billion contract to carry the Sunday Ticket out-of-market television package.

The complex deal blocked cable out of getting Sunday Ticket for at least three years, coinciding with the current network television contracts that expire after the 2005 season. Not getting Sunday Ticket at this juncture disappointed many cable operators, who now aren't exactly looking to do the NFL any favors.

Instead, many experts think some operators will try to keep the NFL Network off their systems as a bargaining chip in future negotiations for Sunday Ticket.

"The cable industry wants [the NFL Network]," said Roger Werner, the former president of ESPN and founder of Outdoor Life Network and Speedvision. "But Sunday Ticket is something the operators will want to tie into it."

Setting the hurdles even higher, the NFL is insisting on relatively broad distribution. Other specialty channels such as CSTV, the Tennis Channel and NBA TV have settled for placement on sports packages like DirecTV's "Sports Pack" or Time Warner's nascent sports tier, where operators can pass the programming costs directly to customers who pay an extra fee. Those packages are thought to reach 10 to 20 percent of a cable company's total subscriber base.

NBA Commissioner David Stern has said he'll accept placement on cable sports tiers for NBA TV, which has live coverage of four games per week.

The NFL Network won't show live regular-season games but isn't so accommodating. If operators want to put the network on a tier, they will have to place it on multiple tiers beyond sports to ensure broad delivery to consumers.

"Ten percent distribution rate is not going to be good enough," said Steve Bornstein, the former ESPN president who's been tapped to run the NFL Network and the league's television business. "[Cable operators] can launch it on a sports tier, but at the end of the day the aggregate is going to have to be broader than that."

The NFL, Bornstein points out, is the most popular sport and the most popular television property in America. Its preseason games (which the NFL Network will air) out-rate the postseason for most other sports.

Bornstein believes the league's enormous following, combined with a few extra goodies for operators such as access to the NFL Films library for video-on-demand purposes, will get the NFL Network onto cable this season.

"There's no doubt in my mind that we're going to get broad distribution with the NFL Network very quickly," he said last week. "Prior to launch we'll be announcing a couple of [distribution] deals."

The video-on-demand element will allow cable companies that carry the NFL Network to also offer customers 24-hours-a-day access to certain NFL Films shows, as well as coach's shows and other shoulder programming that originates in specific NFL team markets. The content would be free to viewers who have V-O-D capable cable boxes.

Bornstein said operators who offer their customers both NFL Network and the V-O-D will be taking "the first step in having a relationship with the NFL," adding that "enlightened cable operators see it that way."

In other words, the message the NFL is giving to the cable industry is: Take what we can give you now, and in three years we'll talk about Sunday Ticket.

The cable industry is being quiet about how it feels about the NFL Network proposition. The major operators all declined to comment for this story, citing the sensitivity of ongoing negotiations.

Experts predict that, simply by virtue of its clout and popularity, the NFL probably can get some cable deals done on those terms.

"I think there's enough interest in the NFL that they [cable operators] will start to pick it up this fall," said Barry Frank, senior corporate vice president at IMG's TWI division. "It's pretty compelling stuff."

Frank said the network will need at least 40 million homes to be viable, but he thinks it can get there by appealing to the large number of frequent gamblers, who collectively wager billions of dollars each year on NFL games and are always looking for an inside edge.

That's not something the league wants to acknowledge, but Bornstein did say the network will cater to an equally zealous audience, the estimated 12 million fantasy football league players.

"Clearly we've been watching the trend of increased fantasy play," he said. "It's a phenomenon that really seems underserved. It's a low-hanging fruit."

The "Playbook" show, an NFL Films-produced hour of in-depth updates on players and teams, will cater to that crowd, airing every weeknight at 10 p.m. ET and repeating several times the next day.

The prime-time lineup begins at 8 p.m. with "NFL Total Access," a football-themed news, talk and variety show anchored by former ESPN sportscaster Rich Eisen, who will talk directly to players and coaches from each of the 32 teams who will serve as the show's analysts.

The 9 p.m. ET show will be "NFL Films Presents." Each Wednesday segment will be a high-definition highlight reel, with the trademark NFL Films baritone narration, of a game from the previous week.

The NFL Network will add more original programming as time goes on, but at launch, most of its non-prime-time lineup will be from the NFL Films library.

Many believe the next three years are simply a warm-up for the NFL Network, after which the league will use the network as a bargaining lever in new rights talks with the primary networks. If ESPN or a broadcast network won't meet the league's asking price in the next television negotiations, the NFL can create competition by having its own network bid to air a game or two per week.

Bornstein downplays that scenario. He said bluntly, "We don't anticipate putting live games on this network." His belief is that the NFL Network simply doesn't need them.

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