Commentary: Football's Fear Factor
Have network TV executives gone mad? It would appear so, based on the Nov. 8 announcement that CBS and Fox will spend $8 billion through 2011 for the rights to broadcast National Football League games on Sunday afternoons. That's more than 25% more than the networks shelled out for their last deal, which isn't due to expire until the Super Bowl in 2006. What's more, it comes at a time when network TV audiences are evaporating amid an explosion of entertainment choices -- and cost-conscious moguls are packing their schedules with endless variations of cheap-to-produce reality shows. (Maybe that's where they've really gone mad.)
So what makes a bunch of trash-talkin' guys smashing into each other every week worth so much? Some network execs still insist they make money on the NFL -- though analysts dispute that. But for outlets that must now compete with hundreds of cable channels, iPods, wireless devices, satellite radio, and good ol' PlayStation, Sunday afternoon football may just be the last bastion of a mass audience for network TV. The NFL's ratings are down almost 9% since 1998, but its broadcasts still average 15.5 million viewers, according to Nielsen Media Research. (The average network audience for a baseball game is 3.6 million.) And the games are live, which makes them TiVo (TIVO )-proof these days since, after all, who wants to watch a game when everybody knows the score?
In a further sign of the NFL's leverage, Fox and CBS agreed to give up four games each on their season schedule to the NFL, enabling it for the first time to offer a package for Thursday night and Saturday broadcasts. The league will also have the right to pick what games run on Monday nights in the second half of the season, an attempt to bolster ratings with more competitive matchups and, ultimately, raise the price for the Monday TV contract.
Dealmaking will be even more interesting in coming weeks as the NFL negotiates with its prime-time TV partner, Walt Disney Co. (DIS ), whose ABC airs Monday Night games and whose cable unit ESPN shows Sunday night games. Getting CBS and Fox on board so early with new deals is clearly a way to nudge Disney. And rumors have it that Time Warner's (TWX ) Turner Broadcasting System is interested, as well as NBC Universal, with its USA Network (GE ).
The networks aren't the only ones shelling out big bucks for NFL games. News Corp.'s (NWSWI ) DirecTV Group (DTV ) said on Nov. 8 that it will pay $3.5 billion over five years to renew its exclusive NFL Sunday Ticket package, a 75% jump over its current package.
Even the late NFL Commissioner Pete Rozelle, who is credited with marrying football to a national TV audience in the early 1960s, might be taken aback by all the billions pouring into the NFL's Park Avenue digs. Nobody understood the media better than that ex-PR man Rozelle. But if he heard today's talk about how future deals might one day put games on cell phones or PDAs, he'd no doubt take a long drag of his trademark cigarette and shrug in amazement.
By Tom Lowry and Ronald Grover