SBJ/September 5-11, 2011/Media

NBC Sports Network the favorite here to win new NFL package

John Ourand
The biggest competition in the NFL this season could be off the field, with as many as five networks angling to pick up the new eight-game package that the league is shopping.

Sources say the NFL already has started talks with ESPN, Fox, NBC and Turner. The league is planning to devote its full attention to the package once it completes a “Monday Night Football” extension with ESPN. The ESPN deal is virtually complete, with lawyers checking the details on a $1.8 billion annual deal that would keep the franchise on ESPN through 2022-23, sources say.

I see NBC Sports Network as a clear favorite to pick up the package, followed closely by Turner.

Comcast clearly has the money to commit to the package. The only question I have is whether NBC can actually afford it.

IDA MAE ASTUTE / ESPN
The “MNF” extension with ESPN is virtually complete, but a new eight-game NFL package is up for grabs.
Look at the math. Cable operators currently pay Versus 30 cents a subscriber a month, according to SNL Financial. With a national distribution of 76 million homes, that equals $273.6 million over the course of a full year.

Earlier this year, Versus committed $187 million per year to keep the NHL. That deal alone leaves $86.6 million in license fee money.

In order to get to the $700 million needed to get the NFL package, Versus would need to raise its license fee from 30 cents to about 75 cents. Given the distribution struggles NFL Network had when it first got an eight-game package, that seems like a tall order.

Here are the odds that I’m giving to the networks.

NBC Sports Network: 2-1
It’s clear that NBC wants the NFL and already has programmed several NFL-themed shows for its NBC Sports Network. My guess is that NBC and the NFL work out a deal that would give the league an ownership stake in NBC Sports Network. For the league, an ownership stake in one of NBC’s cable channels would be an easy way to bolster its media portfolio. For Comcast, it presents a way to get the league’s package without committing $700 million a year up front.

Turner Sports: 3-1
Turner’s David Levy has made no secret of his desire to carry the NFL, which TNT carried from 1990-97. Under Levy, Turner has been creative in cutting sports deals, such as with CBS for the NCAA men’s basketball tournament. Look for Turner to pursue a deal that gives Turner management responsibility over the NFL’s media, similar to Turner’s NBA deal. The NFL has toyed with the idea of giving up management responsibilities — or even an ownership stake — in NFL Network. Given its experience managing the NBA’s digital business, Turner would be a natural partner.

ESPN: 10-1
With ESPN committing $1.8 billion a year on “Monday Night Football” and highlight rights, it seems unlikely that it would commit $700 million more for an early-season package of eight games. I expect ESPN to stick around the bidding process to see if it can get a deal, but I don’t expect it to come close to winning the package.

Fox Sports: 15-1
Fox is the wild card, as it views sports as the surest way to grow FX. For example, the channel gets 44 cents a subscriber a month. TNT gets $1.16, according to SNL Financial. The NFL could help FX move into TNT’s neighborhood. The problem, according to sources, is that several big cable operators have surcharge protection in their deals with FX, which means that the channel would have to wait for these deals to end before it can reap a windfall. In the end, I’d be surprised if Fox’s bid comes close to what NBC and Turner will offer.

NFL Network: 50-1
NFL Network is increasing its distribution to the point where the NFL legitimately could consider putting the package on its own channel. But I see NFL Network as little more than a stalking horse that sticks around to help drive up rights fees.

John Ourand can be reached at jourand@sportsbusinessjournal.com. Follow him on Twitter @Ourand_SBJ.

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