NFL Rights Fees For TV Networks Could Soar, To See A 57% Hike: Analyst
- by Wayne Friedman , September 10, 2020
Network television's growing dependence on still-strong NFL programming could see “gigantic” increases in rights fees TV that networks pay to the league, according to MoffettNathanson Research.
MoffettNathanson estimates that a new round of multi-year contracts set to get underway could see a massive 57% rise to $8.8 billion from $5.6 billion per year for four TV networks.
Among the three broadcast NFL packages, all are projected to see a 75% increase -- CBS for Sunday AFC daytime games), NBC for “Sunday Night Football,” and Fox (Sunday NFC daytime games) as a “base case” estimate.''
For ESPN, and its “Monday Night Football” package, the estimate is for a smaller 26% increase.
MoffettNathanson also estimates a 61% increase for “Thursday Night Football,” which airs on Fox -- although the expectation is that Fox might not bid for the package in the next round of negotiations
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“Given the incredibly important role that the NFL has played in efficiently retaining mass audiences and driving affiliate fees/retrans payments, we are assuming gigantic increases for the upcoming cycle of new NFL contracts,” writes Michael Nathanson, senior research analyst for MoffettNathanson Research
Last year the NFL -- for all its games on Fox, CBS, NBC, ESPN, and the NFL Network -- grew 5% in total viewership to 16.5 million, according to Nielsen data. It was up by a similar percentage in 2018 versus 2017.
MoffettNathanson says that looking at just the four major NFL networks, the average commercial minute program rating plus three days of time-shifted viewing (C3) was up 6% versus the previous year.
ESPN -- in its current multi-year deal with the league, which will end with the 2021-2022 season -- has the biggest per-year rights fee --$1.9 billion -- partly due to pulling in much higher affiliate fees versus what similar revenues broadcast networks get from retransmission deals.
Fox pays the league $1.1 billion per year for its Sunday NFC daytime package and $660 million for “Thursday Night Football.” CBS is at $1 billion for its Sunday AFC daytime package, and NBC has an average $960 million-a-year deal for “Sunday Night Football.”
The leagues are taking a big chance pushing for more and more money so the players can get even richer. It's a mistake to assume that the networks have no choice but to pass higher costs on to sports fixated advertisers who will keep paying more and more forever---simply in a quest for ratings. As I keep pointing out, the games are not necessarily profitable as purely network entries but are lucrative content for the O&O stations and affiliates as well as being an important rationale for for re-transmission fees which, curently generate the largest profits for the networks. While the leagues and players may get what they want this time, there may come a point where the networks have developed profitable SVOD/AVOD services--say four or five years down the road----when they say no. Then what?