A simple dictum has hung among the quotations on the office wall of Steve Bornstein, head of the NFL Network, since his days running ESPN in the 1990s: “You can’t go to Blockbuster and rent tonight’s game.” Blockbuster may have faded, but the allure of live sports hasn’t. The latest testament to pro football’s money-spinning magic is the NFL Network, which is using its lock on 13 Thursday night games to power a $1.1 billion-a-year pay-TV channel that’s tearing away viewers from the major broadcast networks on what traditionally had been their best night. “If you like it, you stay,” says Bornstein, the executive vice president for media at the National Football League, who previously turned ESPN into a cable-sports behemoth and profit machine for Walt Disney (DIS). “That was the concept behind ESPN 30 years ago. We’ve just taken it with the most popular content on the planet, NFL football.”
By reserving Thursday games for the NFL Network, the league is forgoing an estimated $1.45 billion a year in revenue it likely could charge other media outlets for rights to those midweek matches. The NFL is betting it can wring out even more revenue over the long term by showing the games on its own. The league had aired eight Thursday night games on the NFL Network late in the season every year since 2006. But in 2011, when the league negotiated new contracts with CBS (CBS), News Corp.’s (NWS) Fox, Comcast’s (CMCSA) NBC, and ESPN for $6 billion annually, it added five more games to its own Thursday night lineup. Now, with scheduled match-ups from September to December, the channel airs games in three-quarters of the 17-week NFL season.
The network’s reach was bolstered this season after the NFL signed deals with Cablevision Systems (CVC) and Time Warner Cable (TWC) that added the channel to more than 11 million pay-TV homes, a roughly 20 percent increase. In all, NFL Network is now available in 78.3 million U.S. homes. Thursday Night Football is averaging more than 7 million viewers a night this season, Nielsen data show—a number Bornstein says will grow as Time Warner and Cablevision subscribers discover the channel. That puts a hurt on the broadcast networks’ comedies and dramas, says Peter Gardiner, chief media officer at advertising firm Deutsch. The 18-to-49 audience for every major network except for CBS has shrunk on Thursdays compared with a year earlier. “It’s contributing to dramatic weakness in prime time,” Gardiner says.
The NFL Network and its sister RedZone Network, which continuously flips between live scoring drives of multiple games on Sunday afternoons, generate subscriber fees of 95¢ a month for the league, researcher SNL Kagan estimates. That comes to $890 million in annual fees from cable, satellite, and telecom video operators, making the NFL Network second only to ESPN among sports networks. In addition, NFL Network’s ad sales will exceed $200 million this year, more than double the $99.6 million in 2011, predicts SNL Kagan.
That’s creating headaches for rivals that also are some of the NFL’s biggest customers. “Football is on three nights a week now, and there are only seven nights to program,” says Kelly Kahl, who oversees CBS’s prime-time schedule. “Your scheduling options are limited if you try to avoid football at all costs.” When ESPN reported uncharacteristically flat advertising revenue in its most recent quarter, the NFL Network was one factor, figures Barclays Capital analyst Anthony DiClemente. “They are taking share and adding to a saturation of football during the week,” he says. ESPN spokesman Chris LaPlaca declined to comment.
As a former president of ABC, Bornstein sympathizes with the networks. He says, however, all of the networks knew what the league was doing. So he’s forging ahead with more off-season fare, such as coverage of the Combine, where top college prospects try out for NFL scouts, as well as programming built around the annual player draft. “We didn’t pull a fast one by anybody,” he says. “Maybe it’s because of the popularity of the NFL, the impact has been greater than they anticipated.”