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SBJ/Jan. 17-23, 2011/Media
The $2B questions: What the pending ESPN-NFL deal means
Published January 17, 2011, Page 11
These are the 10 questions that seem to be asked most frequently.
• What does ESPN’s increase mean for CBS, Fox and NBC’s NFL deals?
All of the NFL’s broadcast deals run through 2013, so there will be no change for now. But they all will have to pay a lot more money if they want to keep a league package. I expect the broadcast networks’ new NFL deals to each average more than $1 billion a year, starting in 2014. Look for each of the broadcast networks to fork over an average annual increase in the 50 to 60 percent range. The die was cast this fall during Fox’s retransmission battle with Cablevision. Why did Cablevision buckle in the end? It was because Cablevision feared massive subscriber defections if it failed to carry too many New York Giants games — even moreso than the World Series. NFL executives took note when Cablevision agreed to pay Fox $1 a subscriber a month. It’s also watching as the deep-pocketed Comcast takes control over NBC. The league will cash in during the next round of rights negotiations.
• Given Verizon’s exclusive deal with the NFL, what kind of mobile rights is ESPN trying to get?
ESPN and the NFL still are negotiating the mobile part of the deal. As I understand it, ESPN most likely will be able to stream its games to tablets, not mobile phones. (Think wireless versus mobile.) What’s especially interesting to me, though, is how quickly mobile rights have become important parts of these negotiations. All future sports rights deals will be three-screen deals — TV, broadband and mobile. ESPN clearly has led the charge on this. Sports leagues and networks slowly seem to be coming around.
• How likely is it that another cable network will bid on an NFL package?
It will happen. The NFL is going to sell a full-season, 18-game package to another cable network. Right now, Comcast (Versus), Fox (FX) and Turner (TBS, TNT or truTV) are the front-runners.
• What does that mean for NFL Network?
Not much. Expect live games to remain on NFL Network. It’s possible that the NFL will put a full season of games on its network. The channel still doesn’t have deals with most of the big cable operators, and those aren’t coming any time soon. But with a distribution of 57 million homes, the channel makes money for the league, regardless.
• Can’t $2 billion a year buy a Super Bowl?
BCS ratings were great for ESPN. The championship game was the most-viewed cable telecast of all time. Overall, however, the average audience for the BCS’s five games was down 13 percent from last year, when the games were on broadcast TV. It remains important for the NFL to keep its biggest games on broadcast, which means neither ESPN nor any of its cable brethren will come close to telecasting a Super Bowl for the next decade.
• What about the playoffs?
Still uncertain. Right now, all the games are spoken for, and the broadcasters will not want to give them up. But ESPN has made it clear that it wants at least a wild-card game, which is a request the league is looking into. I expect it will happen.
• What does this mean for an 18-game season?
It seems obvious that the size and scope of ESPN’s proposed deal is predicated on the NFL expanding to an 18-game schedule.
• Does this type of payout mean ESPN will pass on the Olympics?
The NFL deal should have no bearing on whether ESPN bids on the Olympics. ESPN was paying for the NFL before this deal; it’ll pay for the NFL after this deal. ESPN already had that money budgeted. It likely would have been a different story if ESPN picked up the rights to the NCAA tournament, which would have meant a new payout. But the increase in NFL rights has to come from somewhere. Current ESPN partners NASCAR and MLS should probably be more worried than the Olympics.
• Will your cable bill go up?
Yes, which, of course, means a whole new round of tough carriage negotiations with cable and satellite operators.
• Will government get involved?
There will be some noise in D.C., but regulators will not interfere with a private business decision.
John Ourand can be reached at email@example.com. Follow him on Twitter @Ourand_SBJ.