In 2011, the NFL signed deals with NBC, CBS, Fox and ESPN amounting to $42 billion in revenue.
But Aereo -- the company that delivers over-the-air signals to consumers without paying the broadcast networks -- could throw a massive wrench into the works.
Aereo has been perceived as a threat to broadcast networks and stations. Now sports franchises recognize that Aereo could jeopardize their financial business model as well.
Thus both the NFL and Major League Baseball have recently filed friend of the court briefs in support of the broadcast networks' legal efforts to stop Aereo.
Should the Aereo threat become real and pervasive, stations could lose millions of dollars in retransmission revenues as Aereo and similar programming services siphon away viewers and presumably ad revenues.
Broadcast networks wouldn’t be able pay for high-valued sports programming anymore. Instead that programming would wind up on cable networks, where, in theory, leagues would get less money -- especially for the likes of the Super Bowl and World Series.
On the flip side, cable networks like ESPN and TNT would benefit. More quality sports programming would come their way at big discounts from what broadcasters pay.
All this leads to another disturbing wrinkle: How would cable, satellite and telco operators feel about paying even higher sports programming subscriber fees to networks? Not too good, I’m sure. In that framework, some severe financial changes would occur – and, for sure, more blackouts.
Live sports programming has been a savior for marketers who flock to the likes of the NFL and MLB. The live programming nature of sports is viewed as more valuable, generally speaking, than scripted or reality programming which can be time-shifted.
For all high-end programming, broadcast networks still get a hefty cost-per-thousand price premium from marketers over cable networks. That would change.
If Internet-delivered TV platforms running broadcast networks for free prevail, it would be no surprise for the whole TV ecosystem to shift dramatically. Already CBS has mulled the idea of turning into a cable network. Time Warner Cable and DirecTV have individually considered setting up their own Aereo-like services where they wouldn’t have to pay retransmission fees to networks.
With sports programming maintaining its value during the last few years of TV and digital media turmoil, you can understand leagues looking to protect what seems to be their home field media advantage.