CBS, Fox, NBC poised to extend rights through '21

The NFL is poised to set off another explosion in the sports TV rights boom, closing in on contract extensions with CBS, Fox and NBC that by themselves would generate more than $3 billion in annual revenue from 2014-21.

As Sports Business Daily first reported, NBC, CBS and Fox are poised to renew their current rights deals with payment increases of more than 60% — only slightly less percentage-wise than the massive “Monday Night Football” extension the NFL and ESPN signed in September.

ESPN went from $1.1 billion to $1.9 billion annually when it renewed its NFL deal.

An announcement of the new broadcaster deals is expected to come this month or early next year. Network sources did not confirm the deals, but speaking at the UBS Global Media and Communications summit in New York today, CBS Corp. CEO Leslie Moonves alluded to them.

“The price of poker is going up,” Moonves said, “(but) even a bad football game outrates most programming.”

Given the increased importance of live programming in the DVR age, the fee increases aren’t surprising, though they certainly might be considered daunting. Fox (whose current NFL package is the most expensive, at $720 million annually through 2013), CBS ($620 million) and NBC ($603 million) will all approach or shoot past the $1 billion-per-year mark in their next deals.

“It’s going to be tough for the broadcast networks to make this profitable,” SNL Kagan senior analyst Deana Myers told Variety. “In a good year, it’s basically break-even or unprofitable.”

But the networks have little choice, because nothing can replicate the audience figures the NFL generates. Even on broadcast leaders CBS and Fox, NFL viewership surpasses the vast majority of their shows. And for NBC, there’s no contest: “Sunday Night Football” is regularly the Peacock’s only program besides “The Office” in the primetime top 30.

The NFL had to fight off labor strife this summer to get itself back on the playing field, but for good reason. When you combine the upcoming broadcast network deals with those of ESPN and DirecTV Sunday Ticket, the league will bring in more than $6 billion in TV revenue beginning in 2014.

And now, the networks have to figure out how to pay it.

“Taking this big of a rise without getting that big of a rise in advertising, (the networks) are likely going to have to look at stations for a greater cut of retrans fees,” Myers said.

While the expectation is consumers will ultimately absorb the costs of the rights increases, Myers noted the growing potential for pushback against the networks.

“There’s always talk on both sides,” Myers said, “about the network wanting more money to pay for more programming, and the operator side saying, ‘We don’t want to pay for this.’ And especially if you’re an over-the-air network, people can get that for free if they want. … I think there’s going to be controversy and turmoil surrounding license fees and retrans fees.”

That’s before the addition of a new Thursday-night package of eight games, the potential for expansion on Spanish-language nets or the possibility that down the road, the length of the NFL regular season will expand from 16 to 18 games.

Myers suggests there is a point where the sports rights rocket ship will plateau.

“I think there has to be a limit,” she said. “You can’t continue to get increases every year that are going greater than inflation. You’ve had a troubled economy and some pushback from comsumers.”

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