TV networks focused on high-priced sports programming maintain a content addiction that won’t go away. What’s the end game?
Much depends on the big professional games via the NFL, NBA, Major League Baseball, NCAA’s Men’s Basketball Tournament and Nascar -- to name a few -- that keep broadcast networks and some cable networks relatively healthy.
The major rub? License fees for those big sports franchises continue to grow sharply higher. However, national TV advertising revenues are not keeping pace.
For example, Magna Global projects the NFL's total national TV advertising -- for all networks -- at $3.9 billion for this season. The license fees for the year come to $4.4 billion.
To be fair, TV networks increasingly find other monies to defray these costs. They include growing retrans fees from pay TV providers -- cable, satellite, and telco companies -- for carriage of their networks. Also, there are “reverse-compensation” fees from local TV stations' affiliates.
Other tangential benefits include overall promotional value, when TV networks air on-air promos of TV shows and other TV-related business in major sports events.
TV networks also depend on sports programming because it is live programming -- increasingly the new “premium TV” for many marketers that place lower value on entertainment programming that may be time-shifted.
Does this mean future sports events will move into more of a "loss leader" description?
For its part, the NFL is already looking at other media extensions -- digital media platforms, such as Twitter, last year and Amazon, which will stream 10 regular-season “Thursday Night Football” games this year. Those games will also be carried on NFL TV networks.
One more wrinkle: The NFL -- long the gold standard of TV sports viewing -- has been seeing a somewhat startling decline, already down more than 10% this season. A year ago, the NFL also witnessed similar declines, only to recover later in the year.
Can TV networks find a new way of handling big sports franchises without going bankrupt?
Perhaps a planned subscription-fee approach -- or a new hybrid ad-subscription model -- would be a solution. It’s either that or a frantic end-of-game two-minute drill.