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Buying blitz centers football rights

Terms of NFL renewals show the league doesn't play games

“Whichever group of negotiators engineered the NFL’s new TV renewals should be driven to the airport immediately and put on a plane to the Middle East — they’d solve the Israeli-Palestinian dispute in short order.”

That’s the jocular suggestion of Dean Bonham, head of the Bonham Group sports consultancy, who says that 10 days after the completion of the first group of deals, he’s still agog at the following triumphs of NFL dealmaking:

  • A 75% increase the National Football League pried out of DirecTV for exclusive rights to out-of-market Sunday afternoon games (to $700 million a year).

  • A 29% boost extracted from the Fox network (to $713 million a year for NFC Sunday afternoon contests).

  • A 24% hike squeezed out of CBS (to $621 million for AFC Sunday afternoon games).

But these are all six-year extensions of current contracts from buyers who convinced themselves to make pre-emptive bids so that no other networks could muscle their way to a seat at the negotiating table — and maybe drive the price up even more.

Analysts have spoken at length about the pressure on ESPN to renew its Sunday night NFL package and ABC to renew “Monday Night Football” in the wake of the early deals put together by CBS and Fox, which don’t kick in until 2006.

Less commented on is the staggering license fee ponied up by DirecTV, which could prove to be a dilemma for the league. The NFL had pretty much made up its mind to end DirecTV’s exclusivity and offer the Sunday out-of-market games to cable operators, who would share them with satellite TV.

The NFL had an ulterior motive for buddying up to the cable operators: It’s hell bent on ramping up the circulation of its year-old NFL Network, the league’s 24/7 digital-cable channel, which reaches about 23-million customers, only a fraction of the subscribers of, say, the 25-year-old ESPN (89.34 million).

The quid-pro-quo for more carriage of the NFL Network was giving cable ops a shot at the out-of-market games, which are a boon to DirecTV in getting NFL fans to throw out their cable boxes and embrace DirecTV’s satellite dishes.

But when DirecTV put $700 million a year on the table to renew its exclusive arrangement earlier this month, cable ops had to be revived with smelling salts.

The question for NFL owners now is: How do they get more coverage for the NFL Network so they can turn it into a multibillion-dollar asset sooner rather than later?

Some observers say the league may have to turn over its planned new package of eight primetime games a year (probably six on Thursday, two on Saturday) to the NFL Network beginning in the 2006 season, six years ahead of the original blueprint for live contests on the channel.

David Carter, a principal in the L.A.-based Sports Business Group, says it would be hard for a cable op to continue rejecting the NFL Network if it carried a live game each week for the final eight weeks of the season, even though many of the contests will inevitably feature losing teams with no playoff hopes. Another negative: Thursday is brutally competitive, delivering more high-rated broadcast programming than any other night of the week (“CSI,” “The Apprentice,” “The OC,” etc.)

Bottom line: The oddsmakers say ABC and ESPN will end up renewing their NFL deals, but the NFL Network’s pickup of the Thursday/Saturday package could be derailed by a humongous, DirecTV-type bid from another cable network, such as TNT, USA, or Spike.

Spurning such an offer would probably not even occur to NFL owners, who are not famous for leaving money on the table.

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