CBS’ 38-year run televising the National Football League is ending, as NBC retained rights to the league’s American Football Conference package with an estimated $ 880 million, four-year deal that left officials at the Eye network seeing red.
That’s because CBS reportedly outbid NBC by as much as $ 25 million per year but was denied the AFC pact. According to NBC, the network reached a tentative accord with the league before Fox Broadcasting Co. snagged CBS’ NFC package with a preemptive $ 1.58 billion outlay over the next four years. CBS’ last-minute scrambling to get in an AFC offer resulted in a bid that wasn’t seen as lucrative enough to unseat the incumbent.
As part of its deal, NBC has obtained rights to televise the Super Bowl — TV’s highest-rated annual event — in 1996 and ’98, meaning the Peacock network will air three of the next five showdowns in addition to having broadcast last year’s game. (ABC will air the game in ’95, the 25th anniversary year of “Monday Night Football,” and Fox has ’97.)
NBC Sports president Dick Ebersol insisted the network will be in a break-even position on the football pact, despite earlier claims that the network lost $ 88 million last year under its current contract, which cost nearly 20% less overall.
Ebersol wouldn’t specificy how the network will reach that break-even point but alluded to increasing value for its stations and an advantage in having broadcast rights to the NFL, National Basketball Assn., 1996 Summer Olympics and , in partnership with ABC, Major League Baseball.
The NBC exec said any hope of reducing football license fees with the latest negotiations was blasted out of the water by Fox, which informed NFL officials in early December that it would top existing levels on either the NFC or AFC package — offering $ 300 million and $ 210 million a year, respectively.
NBC responded with a bid improving on the AFC price, Eber-sol said, at which point Fox tendered its preemptive $ 395 million-a-year offer for the NFC rights held by CBS.
Ebersol said it was “a new ballgame” once Fox entered the picture with company chairman Rupert Murdoch “bound and determined to get one (package) or the other” and committed to buying market share. “It definitely marks the end of the three-network dance for major sports (rights),” he said.
Unlike CBS, which has estimated Fox will lose more than $ 500 million on the deal, Ebersol said he’d be “slow to criticize Mr. Murdoch,” who, he said, had “changed the game forever.”
Ebersol acknowledged that NBC’s lower-rated AFC package may benefit initially from Fox’s weaker distribution system but said he couldn’t foresee whether that situation would endure over the course of the deal.
CBS’ ‘good faith’
CBS officials, meanwhile, were feeling bushwhacked by the NFL, saying they’d made a good-faith effort to hang on to the games. “As disappointing as anything about this is what this means to all the talent we’ve built over the years,” CBS/Broadcast Group prexy Howard Stringer said.
His boss, chairman/CEO Laurence Tisch, also noted that the network had proven its good intentions by failing to raise the fact that NFL ratings are down about 3% this year. Officially, the network said it made “more than a reasonable effort” to continue its NFL relationship but that there was “no way we could match the competing offer.”
According to affiliate sources, CBS had asked its stations to pony up inventory valued at an estimated 3%-5% of its bid for the AFC deal, the affils having agreed to a similar amount in hopes of hanging on to the NFC contract.
NBC said it will discuss possible contributions or compensation adjustments with stations only in those markets that are home to AFC teams. Those cities are Kansas City, Denver, San Diego, Seattle, Houston, Pittsburgh, Cleveland, Cincinnati, Buffalo, Indianapolis and Boston. The web also owns stations in AFC host cities New York, L.A. and Miami.
CBS affiliates weren’t complaining about their network losing football because of the astronomical nature of Fox’s bid. “It’s a big disappointment not getting the NFC, but we understand that CBS couldn’t pay the kind of money Fox was willing to put on the table,” said Mick Schafbuch, general manager, KOIN-TV in Portland, Ore., and past chairman of CBS’ affil board.
“I know that’s what Fox believed it had to do to take the network to the next level of credibility, but you have to ask yourself … was that really the best way to spend their money? What would $ 1.6 billion spent on primetime programming and promotion have gotten them instead?”
“I think most CBS affils, while disappointed at the loss of the NFC, understand it,” noted Alan Bell, prexy of Freedom Newspapers Broadcast Group. “We wouldn’t want the network to go in the tank on an overpriced deal. Sometimes you have to just walk away.
Murdoch under pressure
“Murdoch is in a different position,” Bell continued. “The growth of Fox is stalled and he badly needs to broaden his network’s demographics and solidify his relationships with his affiliates.”
Phil Jones, prexy of Meredith Broadcasting, said: “I respect CBS for walking away from the NFC deal. I commend Rupert Murdoch for stepping up to the plate. Murdoch believes he doesn’t have the cumbersome infrastructure of the other networks so he can do (such a deal) for less. He’s also looking at the promotion and credibility aspects. Murdoch has shown an uncanny ability to make these things work.”
CBS affil board chairman Bill Sullivan of KPAX, Missoula, Mont., called the Fox bid “unbelievable,” pointing out that in his state, Fox is almost exclusively on cable systems, meaning the 50% of viewers without cable won’t be able to get NFC games.
Fox has said it expects to increase its national coverage due to football, and sources say the company is exploring the prospect of syndicating the games in markets where it doesn’t have an affiliate or cable coverage through its distribution wing, Twentieth TV.
ESPN, for example, makes its cable games available over broadcast TV in cities that are home to the two teams.
There’s also loose talk that Fox may ask affils to forgo some of the cash and ad inventory they were going to receive from Fox’s retransmission consent deal.
Ad sales shaky
Ad industry sources note that all the networks are taking a chance by increasing their license fees at a time when two of the major buyers of NFL time — automakers and beer marketers — are talking about cutting back on their national broadcast budgets.
John Spinola, VP of operations for Westinghouse Broadcasting’s TV group, which owns affiliates of ABC, CBS and NBC, said he’s certain NBC was “aggressive without being absurd.” He added that losing the NFL wasn’t equivalent to losing a hit series like “Cheers,” which is there 52 weeks a year. “It’s a big disappointment for CBS to lose out, but no one will throw themselves off the bridge over it,” he said.
Although NBC was able to cut ground-breaking revenue-sharing deals with baseball and the NBA, Ebersol said the football owners — expected to reap roughly $ 4.5 billion from ABC, NBC, Fox and ESPN/TNT deals the next four years — weren’t ready for that sort of arrangement.
Ebersol said elements that make NBC’s plan financially viable will surface over the next few months, but several observers remain skeptical. “You tell me how you pay $ 100 million more and break even” after incurring nearly $ 90 million in losses the previous year, one source said.
As an aside, NBC said next month’s Super Bowl is nearly sold out in terms of advertising. Last year’s game reportedly commanded about $ 850,000 per 30-second spot.