Networks shell out billions for NFL
With NFL games enjoying seemingly invincible ratings while most everything else on TV goes down, down, down, the league's traditional broadcast partners embraced a deal that sends their rights fees up, up, up.
CBS, Fox and NBC renewed their contracts for nine years through the 2022 season, the NFL announced Wednesday. The average fees from the three networks will increase by an average of 7 percent annually, a person familiar with the details said. That will take the total revenue from them from the current $1.93 billion per year to $3.1 billion by 2022.
The person spoke on condition of anonymity because the figures weren't made public.
The current agreements expire after the 2013 season.
American Cable Association President and CEO Matthew Polka expects the networks will attempt to recoup the expense by turning around and cranking up the retransmission fees they charge cable companies, with the smallest operators – those represented by the ACA – feeling the crunch the worst.
“Reports that CBS, NBC and Fox are expected to pay hyperinflationary fee increases to the NFL are a calamity for consumers and should be a clarion call to policymakers in Washington, D.C.,” Polka said. “The fact is that these outrageous sports rights fees will be thrust upon the nine out of 10 U.S. households that subscribe to cable and satellite services and are denied any opportunity to opt out of paying for the channels on which these NFL games will appear. When will the insanity on sports rights fees end?
“If CBS, NBC and Fox want to risk billions in their dealings with the NFL, that’s their business,” Polka continued, “But broadcasters should not be able to rely on the government’s broken retransmission consent and cable carriage rules as the means for them to recoup the cost of their corpulent NFL contracts. Congress and the Federal Communications Commission need to throw a flag, because rules and regulations shouldn’t force consumers to bear the burden of broadcasters’ profligate spending, which will surely enrich NFL owners and players just as much as it will impoverish all pay-TV subscribers, particularly those who will never watch an NFL game.”
"[The deals] will ensure the NFL will stay on free television for another 11 years, which I think is great for fans," commissioner Roger Goodell said at the owners' meeting outside Dallas. "It will continue to allow us to grow our audience. It's a tribute to the players and [Union Chief DeMaurice] Smith for extending our labor agreement for 10 years. I think that kind of stability gave us the ability to get these contract extensions."
Earlier this season, the NFL and ESPN reached an eight-year extension to keep "Monday Night Football" on the cable channel through the 2021 season, increasing the rights fee from $1.1 billion to 1.9 billion annually.
The new contracts also will allow NFL Network to expand the number of Thursday night games it airs beginning next year. The current schedule includes eight games during the second half of the season.
Goodell said the broadcast committee hadn't yet decided on whether to create a separate Thursday package to sell to an outside network.
NFL games accounted for 23 of the 25 most-watched programs among all television shows this fall and draw more than twice as many average viewers as broadcast primetime shows. No wonder network executives piled on the superlatives Wednesday.
"This is incredibly powerful programming," said NBC Sports Group Chairman Mark Lazarus.
"It's as sure as you can get with anything today," said Fox Sports Co-President Eric Shanks.
"It's an unbelievably important product to associate ourselves with," said CBS Sports Chairman Sean McManus.
The three networks will each televise three Super Bowls during the length of the contracts, continuing the current rotation.
The nine-year terms are the longest for NFL television agreements with over-the-air networks. The previous longest were the eight-year deals with CBS, Fox and ABC from 1998-2005.
"With live broadcasts becoming more and more important, having the cream of the crop of live programming for the next 11 years is pretty incredible," Shanks said.
Locking in the NFL is the cornerstone for the rest of networks' economic planning, he said.
"I'm sure even today our ad sales guys' phones are ringing off the hook, even though the deal doesn't start for another two years," Shanks said.
CBS will continue to show the AFC package on Sunday afternoons as it has since 1998, while Fox still has the NFC package that it first acquired in 1994.
"Sunday Night Football" will remain on NBC, which picked it up in 2006. The network will add the annual Thanksgiving primetime game starting in 2012, exchange one of its current wild-card matchups for a divisional playoff game and create a Sunday morning pregame show in 2014 on NBC Sports Network (the future name of cable partner Versus).
It also gets three Super Bowls in nine years, compared with two in eight seasons under the old deal.
The Thanksgiving night game had been on NFL Network.
"It's one of the most important advertising days of the year," Lazarus said. "We think this will elevate Thanksgiving not only for NBC, but for the NFL."
Flexible scheduling will stay in effect to ensure quality late-season matchups on Sunday late afternoons and nights. It will be expanded in 2014 to allow some AFC games to air on Fox and NFC games on CBS, and for NBC to start switching out its primetime matchups earlier in the season.
Shanks said the "cross-flexing" would allow more of the country to see certain appealing matchups.
The deals include "TV Everywhere" rights for the networks to simulcast games online and on tablets – though not mobile phones, for which Verizon has a separate agreement.