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The NFL is testing the popularity of live games on OTT networks by offering 10 “Thursday Night Football” games for bid.
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Digital companies thinking about cutting a deal for over-the-top rights to the NFL’s
“Thursday Night Football” are being offered 10 of the package’s 18 games, according to several sources.
They have been asked to bid on the five early-season games CBS will carry and the five late-season games on NBC. NFL Network’s eight-game schedule will not be sold to a digital company, sources said.
The reason for the decision can be found in language that is in some of the cable affiliate deals that NFL Network signed. If the league opts to stream NFL Network’s games to non-cable subscribers, cable operators have the right to slash the channel’s license fee, which is more than $1 per subscriber per month. The cable affiliate deals say that NFL Network has to carry a minimum of eight games exclusively in order to keep its license fee at around $1.
It’s not known how much cable operators can cut the license fee, but in 2004-05, the years before NFL Network started carrying regular-season games, the channel’s license fee was just around 15 cents. The channel is in 69.6 million homes, so any cut to the license fee would wind up being costly to the league.
The NFL is viewing its OTT plans as more of an experiment — a chance to get digital companies to see the popularity of the league’s live games firsthand.
League officials are not expecting to bring in the same kind of rights fee that it received from last season’s stream, when Yahoo spent around $15 million.
First, Yahoo carried the game exclusively, minus the home markets that showed it on local TV. Secondly, unlike the Yahoo game, the winning digital bidder will not control most of the online ad revenue for the games; the TV networks will. That was one of the reasons CBS and NBC agreed to pay $450 million per year for a package that the NFL would stream.
Network sources said CBS and NBC have not decided whether to sell and insert different ads online or simply keep the same ads run as a simulcast.
The winning digital bidder only will be able to sell the local affiliate ads online, which amount to a couple of minutes every hour.
The NFL’s top media executives continued to express confidence during Super Bowl week that a digital deal could be signed by the end of the month. League executives would not identify the companies that are considering the package, only saying they could split the rights between two.
Sources said that potential bidders include Amazon, Google/YouTube and Apple. Facebook and Yahoo have kicked the tires but are not believed to be as aggressive as the others.
John Ourand can be reached at jourand@sportsbusinessjournal.com. Follow him on Twitter @Ourand_SBJ.
