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ABC Looking to Take CBS’ or FOX’s Sunday Afternoon NFL Regionalization Package
The NY Post reported that ABC is “kicking around the idea” of making an aggressive push for the NFL broadcast rights currently held by FOX and CBS, deals set to expire at the completion of the ’22 season. ABC is looking to grow its viewership base and NFL broadcast rights have long been considered “either the top reason, or one of them, for an overall broadcast network’s success”; ABC currently sits a distant 3rd (behind NBC, CBS) in ratings among the Big 4 networks. Both Sunday afternoon packages would include the rights to broadcast the Super Bowl (on a rotating basis), noteworthy considering the ’18 game generated $414 million in ad revenue for CBS. The Sunday afternoon packages aren’t the only ones coming up for renewal, both FOX’s TNF package and NBC’s SNF package will expire at the end of the ’22 season; ESPN’s MNF package expires at the completion of the ’21 season.
Howie Long-Short: It’s important to point out that ABC didn’t pass on the NFL in 2005, as much as it was a larger strategic decision by Disney (DIS) to transfer rights to ESPN. As Scott Rosner, Academic Director of the Sports Management Program at Columbia University, explained, “the affiliate fees piece for ESPN was simply more compelling (for DIS). It lead to a net increase in revenue and gave the company leverage with all of the other ESPNs.”
ABC’s interest in the Sunday afternoon timeslots is motivated by its desire to “boost the overall health of the network’s ratings.” So, I wondered why speculation suggests Disney would be pursuing one of the Sunday afternoon windows. Wouldn’t it make more sense to go after a prime-time package?
Scott: The longstanding theory has been that viewership on Sunday afternoons gives lift to the overall visibility of your other programming; those mentions of what’s following the game, help to drive viewers to your non-sports programming.
Should ABC rejoin the mix in pursuit of NFL television rights it would be a boon to the league. As Scott said, with more players at the table than there are rights packages to be sold, “rights are certain to increase. The best content – in particular sports content – is more valuable now than it’s ever been. It’s just harder to amalgamate audience around any one property. The more fragmentation you have, the more having those kinds (NFL rights) of big properties really matters.”
For what it’s worth, FOX is currently paying $1.1 billion/annually for the NFC package, while CBS pays $1 billion/annually for the AFC package. Why is the NFC package more expensive? Fox drew 18 million viewers/game in ’18, while CBS drew just 16.5 million/game.
The NFL has repeatedly discussed its desire to be in front of the greatest number of eyeballs, so doesn’t it behoove the league to ensure ABC gets a package (over ESPN) during the next round of rights renewals?
Scott: It comes down to dollars. ESPN is paying $1.9 billion – on an average annual basis – under the terms of the current deal. The NFL’s business model when dealing with external forces is in many ways capitalism at its finest. I wouldn’t expect them to take less money (from ABC), nor should you expect them to take less money for broader exposure.
One Barclays analyst suggested that CBS’ package was most vulnerable because the company is low on cash. Would you agree with that assertion?
Scott: No, I think they’re all, to a degree, somewhat vulnerable. As for CBS specifically, positions can change dramatically before bids are due, as can ownership and strategic alliances, so I think it’s premature to think about cash positions or lack thereof. If you are cash strapped that will obviously have an impact (on your ability to submit a competitive bid), but it’s too early to say that will or won’t be the case.
Fan Marino: The NFL’s out of market rights may also be available as the league has the option to termite its existing pact with DirecTV prior to its scheduled expiration at the completion of the ’22 season. The NFL has been partners with DirecTV for 25 years, so it’s difficult to envision another provider with the league’s out of market rights, but DirecTV has acknowledged its done launching new satellites as it moves towards a streaming centric business and the league’s out of market package is at least currently restricted to satellite providers (i.e. no streaming companies). While the company would arguably have the most to lose amongst all current rights holders (it’s a customer retention/attraction tool for them, subscribers with Sunday Ticket are their most lucrative subscribers) if it were to lose its NFL content, it’s worth wondering why the NFL would even consider a company that’s thrown in the towel on their satellite business, in the next round of negotiations; Scott says, “the answer is simple. DirecTV is willing to make the offer that the NFL can’t refuse.”
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