The owners of NFL teams are nothing if not diehard capitalists, so why are they running to the government, urging it to force cable operators to carry the struggling NFL Network?
“The NFL has gambled twice and lost twice,” says Rick Gentile, professor of sports management at Seton Hall U. “The first gamble was to create a 24/7 NFL cable network. The second was to put eight live regular-season NFL games exclusively on the network,” instead of selling them to a willing bidder like Comcast’s Versus network, which offered a strapping license fee — reportedly $400 million a year — to get the rights.
The second bad decision was particularly costly, because it allowed Comcast, the biggest cable operator, to legally downgrade the NFL Network last summer from digital basic, reaching up to 9 million subscribers, to a separately priced sports tier that barely cracked 1 million customers.
The NFL Network has appealed Comcast’s victory (issued by a New York Supreme Court in early May). Roger Goodell, commissioner of the NFL, says Comcast is not being nice to its customers by charging them between $5 and $8 a month to get the net.
Comcast says it’s being super-nice to its digital subscribers by not charging all of them a bigger monthly fee to cater to the needs of footballfans. As David L. Cohen, executive VP of Comcast Corp., puts it: “Viewers who want to watch the channel will be able to see it, while others who prefer not to receive it will not be forced to pay.”
But at least Comcast is carrying the NFL Network. Four other big cable operators — Time Warner, Charter, Cablevision and Midiacom — have repeatedly told the NFL to take a hike; unless, of course, the league is willing to get pitchforked into the cable Siberia of digital-sports tiers. These tiers are the ragged stepchildren of the cable business, scratching out only a small percentage of a cable system’s customers.
As the most lucrative sports league in the U.S., which last year signed long-term contracts with Fox, CBS, NBC and ESPN that will eventually yield a staggering $20.4 billion in total license fees, the NFL is not used to such ill treatment. Sports-media experts can’t remember the last time the league wound up on the losing end of a power play.
The NFL Network is way behind the business plan it drew up before it began operations in November 2003. It reaches only about 35 million cable/satellite homes (ESPN has 96.6 million customers). Just as bad, despite the high cost to the distributors that do carry it, the network will pocket a negligible cash flow of $5.4 million in 2007, according to SNL Kagan.
Chiefly responsible for the dismal cash flow are meek ratings: NFL Network averaged only 147,000 viewers in primetime during the third quarter, putting it 54th out of 69 cable networks monitored by Nielsen.
The NFL is advocating arbitration to solve the standoff, and a proposal from the FCC could come as early as the panel’s Nov. 27 meeting.
It’s a sign of the league’s frustration that it’s conceding defeat even as the NFL Network’s eight-game schedule is loaded with first-rate teams. The Nov. 29 primetime game features the Green Bay Packers and Dallas Cowboys, the top teams in the National Football Conference.
The Cowboys return Dec. 22, and the powerhouse Pittsburgh Steelers appear Dec. 20.
But the biggest game could come on the NFL Network’s final primetime contest of the season, Dec. 29, when the New England Patriots charge into New York to take on the Giants — a game that could have an undefeated Patriots squad trying to become the first team to win all 16 of its regular-season games.
The NFL is using these marquee games in a ramped-up marketing campaign urging cable subscribers deprived of the network to cancel cable and truck in a satellite dish. But a similar marketing campaign failed last year to change the mind of Time Warner and the other holdouts, so the NFL is not optimistic it’ll gain any yardage this season.
Does the fate of Western civilization hinge on whether millions of football fans can’t call up eight NFL games on their flat-screen TVs over the next six weeks? Hardly, says Chris Bevilacqua, a partner in the sports-marketing operation SPC Worldwide. “At the end of the day,” he says, “the poor viewer is caught in the middle of a corporate food fight.”
“It’s not a case of good vs. evil,” Gentile says. “I wouldn’t even call it evil versus evil. It’s more like a big bully picking on a little bully. And most of the time, you don’t even know who’s the big bully and who’s the little bully.”