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SBJ/20090126/This Week's News
Could popular Sunday Ticket package be a key to the future growth of NFL Network?
Published January 26, 2009
Why has NFL Network’s distribution push stagnated, just as the new MLB Network completed the most successful launch in cable history?
NFL executives would point to MLB’s decision to sell equity in the channel to cable operators. Cable operators, however, would counter by pointing to the monthly cost of each channel. At 70 cents per subscriber per month, NFL Network charges more than twice as much as MLB Network.
But one of the most compelling reasons for the distribution difference lies with how each league treats its out-of-market package. The NFL has sold Sunday Ticket exclusively to DirecTV since 1994, and its current deal lasts through 2010. MLB decided to tie access to Extra Innings with carriage of its network. Cable couldn’t take one without the other.
Cable operators are quick to point to that discrepancy as a main reason why NFL Network is having distribution problems.
“If we had been given access to the NFL Sunday Ticket, we would not have been able to put the NFL Network on a sports tier,” said David Cohen, Comcast executive vice president. “The deal structures between the NFL and Major League Baseball are 100 percent identical. It’s just that the two leagues have treated their out-of-market packages in a different way. As a result, they’ve ended up with different carriage of the network-owned channel.”
Major League Baseball discovered the power of its out-of-market package as a negotiating tool two years ago, when it was battling cable to carry its channel.
In October 2007, soon after he secured carriage on the top cable operators, MLB’s Tim Brosnan said the threat of losing Extra Innings to satellite is what brought cable operators to the table.
“We probably underestimated how powerful a weapon going exclusively with the Extra Innings package was,” he said.
Since then, other league channels, including NBA TV and NHL Network, have tied carriage of their league-owned channels to access to their out-of-market packages.
NFL Network’s Steve Bornstein would not discuss the specifics of his channel’s distribution strategy, but said he doesn’t compare the NFL’s channel to that of any other league’s.
“Comparing us to those networks is not anything that I ever do,” Bornstein said. “I’m putting out a 24-hour-a-day signal that’s getting real viewership.”
A former NFL executive believes the Sunday Ticket argument from cable falls short. The executive suggested that the league probably would not be in a better financial position if it cut a Sunday Ticket deal with cable because the league would wind up with essentially the same amount of revenue regardless of what it does.
“On one hand, they would get much broader distribution at rates they were happy with,” the executive said. “But the rates would be tied into Sunday Ticket, so there might not be incremental economic value being created for the league at some level — getting paid less for Sunday Ticket but getting paid more from cable.”
— John Ourand