SBJ/May 1 - 7, 2006/This Weeks News

NFL takes time to study Net rights

After a prior deal that established a benchmark for domestic sports on the Internet, the NFL is now taking those rights in-house — at least temporarily.

The NFL is trying to figure out what to do
long term with its Internet rights.
The league is close to completing a deal with CBS SportsLine that would extend their relationship with NFL.com and SuperBowl.com for up to a year. However, under the new arrangement, which has been verbally agreed upon, the NFL will now sell its own online advertising and pay SportsLine a fee estimated in the mid-seven figures.

Under the old deal signed in 2001, which expires this month, CBS SportsLine paid a rights fee and sold ad space on the sites. In this new agreement, the NFL can pay to end the SportsLine extension at nominal cost if and when a more lucrative deal surfaces.

Extending SportsLine’s rights removes any pressure to make a deal with a deadline approaching. It also allows the league to take a more considered approach as it sorts through a bewildering array of digital platforms, all of which converge and impinge on each other. The league can now study whether it is better off selling video downloads through Google, a la the NBA, streaming it themselves, or perhaps reserving those rights for video-on-demand, which could be offered to cable operators who carry the NFL Network.

The NFL “has not decided what to do long term, not only with the Internet, but with every digital delivery platform,” said a source with knowledge of the negotiations. “But a lack of demand or having potential deals on the table are not issues. More deliberation was necessary, and SportsLine allows continuity.”

There were also a number of substantial issues that had to be completed before a digital rights deal could be approached. The NFL only completed its new collective-bargaining agreement in March, and its Thursday/Saturday TV package was finished in January, and it is those games that are most likely to be digitally distributed.

Additionally, with a new commissioner anticipated this summer, several highly placed team sources said weighty and delicate decisions such as streaming games on the Internet, which would directly affect big-money NFL rights holders such as broadcast partners and Sprint, may be postponed until a new NFL administration is in place.

With the additional online inventory and the Thursday/Saturday games, the NFL continues its recent transformation to more of a media sales organization. It can now offer its own integrated TV/digital packages/wireless media packages, similar to what is offered by NFL rights holder ESPN.

The timing of the NFL’s placeholder deal surprised some bidders, which include Yahoo!, AOL, ESPN and many other heavyweights of the Internet industry. But given the impending arrival of training camp and the 2006 regular season, when the highest traffic periods for NFL.com happen, those bidders said they understood the move.

“I’ve sort of felt this was coming for a while,” said an executive connected to one of the bidders. “There’s an awful lot of change going on over there right now, and it’s really just time to stay the course for now. July is like tomorrow in our space, and you don’t potentially flip over all your Internet operations — fantasy, news, scoreboards, everything that goes into this — to somebody else overnight without risking major problems.”

While a new long-term Internet deal is likely to involve more operational and sales control for the NFL than the one now expiring, industry experts do not expect the league to begin moving in a total self-control direction that would perhaps mirror MLB Advanced Media.

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