At the annual Television Critics Assn. press tour in July, CBS topper Leslie Moonves faced an auditorium full of reporters to discuss the Eye’s most promising new program: eight weeks of “Thursday Night Football.”
Moonves was ebullient, calling “TNF” “a sure thing.” Then came a moment any producer would envy, as the CBS honcho proclaimed, “It is our job to show the NFL what we can do, how great it’s going to be and how great the partnership is going to be.” Then he added the money shot: “We couldn’t live without the NFL.”
Here was a network — the most-watched in the business — pledging to prove itself to a program supplier. Simply put, the National Football League may well be the most powerful entity in the history of American television.
“The NFL right now can write its own checks and draft its own contracts,” says financial analyst Craig Moffett, founder and partner at MoffettNathanson. Indeed, the cost of doing business with the league is stratospheric — approximately $5.3 billion a year anted up by the NFL’s four network partners — including the $275 million CBS is forking over for its Thursday-night package. Yet the nets are not only willing, but downright eager to be in business with the league, no matter the terms.
There are good reasons:
» “Sunday Night Football” has been the top-rated primetime series for the past three seasons, with more than 20 million Nielsen viewers per night.
» The Super Bowl is perennially the top-rated TV event of the year, by far. This year’s championship was seen by 112.9 million viewers. Second best? The Oscars, with 43.7 million.
» Even non-game NFL events are ratings winners: The first night of the 2014 NFL Draft on ESPN and the NFL Network nearly quadrupled the audience of two pro basketball playoff games the same night on TNT.
» As high as the NFL’s ratings are, they’re likely under-reported, because viewers in bars, restaurants and other group settings aren’t counted. It’s a flaw in the entire Nielsen system, but NBC Sports chairman Mark Lazarus calls it acute for pro football. “In our ad rates, I don’t think we get credit for all the viewers we’re delivering,” Lazarus says.
Fox and News Corp. exec David Hill, who oversaw Fox Sports for nearly two decades, cites the risk of devaluing NFL rights. “Every time a network has said, ‘We can’t afford it … It’s too expensive … We don’t need it … Our programs are good enough to get us where we want to be … ’ As soon as (they’re out of football), they’ve gone, ‘Oh my God, we’ve got to get back into it.’ ”
However Moonves and his peers may feel about the NFL in their heart of hearts, the networks insist the league is a great partner. It remains committed to free terrestrial TV, reasoning that free telecasts build its fanbase — which builds ratings. “Broadcast television, in particular, is still the most efficient way to reach all of our fans,” says Brian Rolapp, executive VP of NFL Media. “Broadcast television is in every household in this country; broadband isn’t. Broadcast television can sustain 30 million viewers at one time, but the Internet couldn’t sustain 30 million concurrent users at the level of quality you would expect as a fan or that we would expect as the NFL.”
The NFL has not been shy about flexing its negotiating muscle, and so far, no one has balked. AT&T has said publicly that its proposed $67 billion acquisition of DirecTV is contingent on the satcaster renewing its deal for Sunday Ticket, the premium package that gives viewers access to games not shown on local TV. DirecTV has been paying $1 billion per year for Sunday Ticket.
“It gives the NFL unlimited negotiating leverage” Moffett says. “If I were (NFL commissioner) Roger Goodell, I would ask for a hovercraft to take me to the moon, and then I’d ask AT&T to fill it with truffles.”
While the league hasn’t gone quite that far, it did recently announce plans to require prospective Super Bowl halftime acts to kick in coin from their tours for the honor. The American Federation of Musicians and other unions criticized the idea.
The league’s unprecedented power springs from a confluence of factors, some from structural changes in the TV biz, others the result of the league’s own policies.
While ratings for football have been climbing year over year — in fact the Sept. 4 opener between Seattle and Green Bay on NBC had an average audience of 26.9 million, 7% higher than last year — the numbers for other broadcast programming have declined as audiences have splintered, leaving the networks fumbling for a solution. “As the world migrates to video-on-demand consumption,” says Jon Miller, president of programming for NBC Sports and NBC Sports Network, “sports, and particularly football, is consumed live, and by very large audiences.”
The benefits of the NFL ripple outward for any network that acquires it. Sunday afternoon games boost ratings for the CBS and Fox primetime lineups that follow. The Sunday night games pump viewership for NBC affiliates’ late local news and for morning news on Monday.
“There is no programming on TV in any daypart that’s as powerful as NFL football,” says CBS Sports chairman Sean McManus. “It dominates the ratings, no matter when it’s on; there’s nothing that comes close. And if you have the opportunity to add more NFL football to your schedule, you jump at the opportunity.”
Football also reaches a more diverse audience than ever. Hill says the female share for pro pigskin has gone from around 40% some 20 years ago to around 48% last season. “So 20-25 years ago,” he says, “you would make your promos for your new season shows aimed at a male bias. Now you don’t have to.” The league may have had its female viewers in mind when it recently introduced increased penalties for players guilty of domestic violence: A second offense now results in a lifetime ban.
The combination of growing ratings and a more balanced mix of viewers has made NFL games a unique, indispensable promotional platform. During NBC’s most recent Super Bowl, which covered more than 12 hours of programming, the Peacock pitched 18 NBCUniversal businesses, including films, theme parks, and various network dayparts. “That was a very valuable thing to have,” says Miller, “not only for giving back to the divisions in our company, but also creating a cooperation level in the company.”
The fact that football teams play only 16 games a season — roughly once a week — has worked in the NFL’s favor, making each game an event. Baseball teams play daily, pro basketball and hockey franchises an average of about three times a week. Those sports play better regionally; football’s audience is nationwide.
Moreover, the league has been assiduous about tweaking its rules to make its product more appealing on the smallscreen. “The game itself is as competitive as it’s ever been,” Rolapp says. “Scoring is up but the margin of victory is down. Any team, regardless of market size, can compete and can win the Super Bowl.” And while a July baseball game between the Milwaukee Brewers and Chicago Cubs, for instance, commands only a regional audience, an October game between, say, the Green Bay Packers and Chicago Bears is often must-see TV across the continent.
The NFL’s rise to dominance didn’t happen overnight. A turning point came in 1993, when Fox, which NBC’s Dick Ebersol had dismissed as a “pushcart” network, shocked the world by bidding $1.58 billion for broadcast rights to the more established half of the league — the National Football Conference. CBS, which had held NFC rights for 30 years, had bid $290 million.
“CBS blinked,” says Hill, “which allowed Rupert Murdoch and Chase Carey to make (a deal that) was (at the time) derided. What it did was establish Fox and created a multibillion-dollar corporate empire for News Corp.” Indeed, within months, Fox network coverage in the U.S. went from about 91% to 100%. Some CBS affiliates switched to Fox. “If you look at FX, FXX, National Geographic Channel and all the Fox Sports properties,” says Hill, “all that came out of the establishment of Fox through the National Football League.”
In 1998, a chastened CBS paid $4 billion over eight years for games of the other half of the league, the American Football Conference, which had been on NBC since the 1960s, when the American Football League was established as a rival to the NFL. (The upstart league presciently banked on TV money to make it viable, and in 1970, the two leagues merged.)
By 2006, for a number of reasons, NBC had fallen to last place among the Big Four networks. “(The NFL) wasn’t in (primetime), so we didn’t necessarily lose the prime numbers,” Miller says, “but we lost the exposure to reach the prime numbers. It was sort of a slow leak.” When ABC decided to let sister network ESPN become its lone NFL rights-holder, passing off its long-held Monday night franchise, the cable network punted its Sunday night game, and NBC had its primetime solution, paying the league $600 million per year — a pact renewed for the current season for almost $1 billion annually.
Hill even wonders whether ABC might want “Monday Night Football” back from ESPN. “If I was running the network, that’s something I’d be screaming about,” he says.
Broadcasters can rationalize the hefty cost against the benefits they see across all their platforms. “It’s not always about the piece of content itself,” says Rich Greenfield, media analyst at BTIG. “If you charged all of the cost of the content against the three hours that it airs once a week, you may lose money. But when you think about it in terms of driving ratings of other shows, or driving retrans, or driving affiliate negotiations across 100 million households, it’s incredibly profitable.”
There are a few clouds threatening the NFL’s sunny outlook: the need to expand to new markets (the league hasn’t had a team in Los Angeles, the second-largest TV market, since 1995); the threat of labor problems; mounting evidence that even routine blocking and tackling cause chronic traumatic brain damage.
But Hill feels the greatest threat to the NFL is simply “hubris and greed.” A sign of such a fault, he says, would be a major increase in the length of the schedule — a move that is nowhere on the horizon. But is there nothing else that can make the NFL stumble?
“I can’t see anything,” Hill says.