SBJ/Jan. 27-Feb. 2, 2014/Media

NFL weighs value of Thursday nights

If NFL Network fails to carry a minimum number of NFL regular-season games, the league stands to lose tens of millions of dollars each month in cable carriage fees, according to several sources who have seen the league’s affiliate deals.

NFL Network stands to lose carriage fees if it fails to televise a minimum number of regular-season games.
Photo by: AP IMAGES
The league certainly is mindful of the contract language that mandates a minimum guarantee of games as it negotiates a new Thursday night package with various television networks. NFL Network has carried a 13-game package exclusively for the past two seasons and has carried regular-season games since 2006.

A question the NFL has to be asking now is whether it can make more money from selling the full package to an outside TV network than it can make in extra carriage fees and whether a bigger TV channel can increase the popularity — and corresponding rights fees — of the Thursday night package.

It’s difficult to pinpoint exactly how much the league stands to lose in affiliate fee revenue if it falls short of a minimum number of games. That’s because the league’s affiliate deals differ by distributor, sources said. Sources with some of the country’s biggest distributors say NFL Network’s affiliate fee would drop to around 25 cents per subscriber per month if its live regular-season game package is reduced to between four and six games.

NFL Network costs more than $1 per subscriber per month, according to SNL Kagan. It is the most widely distributed league-owned network, in more than 72 million homes, according to Nielsen estimates.

Earlier this month, the NFL accepted bids to split its live game package with TV networks. All of its network partners placed bids (CBS, ESPN, Fox and NBC), as did Turner Sports.

The NFL has told the networks that it plans to simulcast those games on NFL Network. It’s not clear if the simulcast games would count as part of the network’s minimum-game guarantee. The deal currently being negotiated is only for one year. It’s expected that the league will try to sell a multiyear package of NFL games after the 2014 season.

The league clearly believes in the long-term growth prospects of its Thursday night franchise. If its affiliate fee drops by, say, 75 cents per subscriber per month, that would equate to nearly $650 million in straight rights fees per year. The league should expect to make at least that much from a TV network bidding on a full, exclusive Thursday night package. Turner Sports has expressed interest in picking it up. Plus, Fox Sports and NBC Sports Group are interested in bringing such high-profile programming to their sports channels — Fox Sports 1 and NBC Sports Network.

The NFL has said that it solicited bids in an effort to expand its Thursday night franchise. NFL Network’s games are the lowest-rated NFL games on television. In the 2013 season, NFL Network games averaged 7 million viewers, a little more than half of ESPN’s 13.7 million viewer average and about one-third of NBC’s 21.7 million viewer average.

The quality of games is not expected to change in the new package, as the NFL told network executives that all league teams have to play a Thursday night game.

NFL Network can credit the live-game package for much of its growth in distribution and affiliate fees. The channel started carrying eight regular-season games in 2006, a move that tripled its affiliate fee at the time to around 70 cents per subscriber per month.

The league still had difficulty gaining carriage on Time Warner Cable and Cablevision. So two years ago, it added five more games to the package, giving it 13 games. Cablevision signed a deal to carry the network in August 2012; Time Warner Cable signed its deal about a month later.

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