How many of you watched the Super Bowl this year? Of course, in Philadelphia, that’s a loaded question with the underdog Eagles in the game and beating the seemingly perennial winners, the New England Patriots.
Same thing in New England. Their team was in the Super Bowl and they don’t get sick of Tom Brady nor Bill Belichick. They watch.
But what about the rest of America? Apparently two thirds of Americans did not watch. And this was the Super Bowl!
Imagine how that would translate to Thursday night National Football League games, known for having bad matchups and also being available on the NFL Network and streaming, besides being broadcast on a local TV station.
But three weeks ago, Fox decided to pay a fortune — $3.3 billion for the rights for five years, and expanded digital highlight rights — and the money it’ll cost is going to trickle down to you and me.
Let’s talk schedules, the reason and then the money.
Starting this fall, Fox will broadcast 11 games each season from week 4 to week 15. That won’t include Thanksgiving night when you’re
eating with your family shopping or resting up to work at midnight on Black Friday.
ESPN reports when Thursday Night Football went to the networks in 2014, CBS paid the NFL just $37.5 million per game for only eight games. Same story the next year, in the 2015 season.
Then, for the past two seasons, NBC joined CBS. They each broadcast five games for a total of ten, at a cost of $45 million each.
Now, ESPN sources say Fox will pay an average of more than $660 million a year. Divide that by 11 and that makes $60 million per game – a big increase over the past four seasons and 33 percent more than the latest. Amazing number!
Is that price increase worth it? It depends who the buyer is.
(Not many remember Fox trying to take Monday Night Football from founder ABC back in early 1987, even before it started programming. That didn’t work and it took until 1994 for Fox to get an NFL package. Oh, and five times as much money as CBS would bid!)
These days, Fox doesn’t have much of a regular Thursday night lineup. The NFL would draw viewers.
Are NBC and CBS upset about losing the rights? No, according to CBS CEO Les Moonves. He says he’s not worried because CBS has The Big Bang Theory and Young Sheldon instead. Also, Sunday games are much better than Thursdays because they’re exclusive. Thursday night games can be seen on The NFL Network and also streaming.
A CBS Sports spokesperson was more specific:
“We look forward to continuing our terrific long-term partnership with the NFL on Sunday afternoons with more than 100 games per season (Lenny: many in markets where the home teams are playing) including next year’s Super Bowl LIII.”
“Amazon paid $50 million this past season to stream the games on Amazon Prime, up from the $10 million Twitter paid in 2016,” it reports. “Rights for the upcoming season have not yet been sold.”
So you can say it’s “1st and goal” when it comes to the NFL and Thursday night streaming rights.
Now, look back to 1972 and the Miami Dolphins’ perfect season. At the time, the NFL regular season only had 14 games over 14 weeks. Monday Night Football was only in its third season. Otherwise, football fans were left to Sunday afternoons.
These days, the season has 16 games over 17 weeks. Economically, more games should lessen demand.
On top of that, Thursday nights mark a regular third night of football (before Sunday and Monday), along with early and late Sunday afternoon games.
Plus, ESPN reports players don’t care for Thursday Night Football. Games on so many days cuts down on their time to rest up, recover and stay healthy. And as a side note, just last month, I wrote about how hits and concussions have literally killed former NFL players, years later.
The last NFL schedule expansion was in 1987 when ESPN started carrying some Sunday night games. It was the first time the NFL aired games on cable and they only took place in the second half of the regular season. Two years later, the NFL added games on TNT in the season’s first half. TNT aired those games until 1997, when ESPN took the whole season. Like today, games in each competing team’s home market also aired on a regular TV station, so the games were not cable-exclusive but close. But the arrangement ended after the 2005 season.
That’s because NBC had no football for seven seasons and was desperate to get it back. It had lost AFC team away games to CBS, which itself had been outbid by Fox for NFC team away games.
Part of Fox’s reason to spend so much in 1994 was to take TV stations in big-markets with (mostly) NFC teams and make them affiliates of the new network that would air the games. Fox eventually bought those stations (but STILL doesn’t tell you what it owns on the Fox Television Group website) and sold about half.
That didn’t mean a new night of football but Sunday night games became especially popular since they air on the most-watched night of TV, they follow other games on CBS and/or Fox but most importantly, the NFL considers Sunday Night Football its featured game of the week.
NBC was given flexible-scheduling for most of the second half of the season, meaning it can “steal” regular Sunday games from CBS or Fox that are better than what was on its original schedule, and the whole country can watch.
When that happens, NBC will tell the league at least 12 days (two Tuesdays) before, and move that CBS or Fox game to NBC. However, CBS and Fox can “protect” five Sunday afternoon games over six weeks, weeks 11-16. Also, the league can move games between 1pm to the more-watched 4pm ET slot.
Now that you understand that, Thursday night games were actually added back in 2006 and air on The NFL Network, so the NFL could push cable and satellite companies to carry the network very few people were able to watch (and thus charge the subscribers more, which is the crux of this post).
It wasn’t until 2014 that Thursday Night Football got real recognition. The NFL decided to let a network produce the game – which would air on The NFL Network — but let the producing network simulcast some of the games. That’s what CBS did in 2014 and 2015, and NBC joined to split the Thursday package in 2016 and 2017. The contracts for the rights were short.
That’s when Fox decided to pay a fortune – much more money – for a longer period of time, over five years.
There are several reasons, which may or may not turn out to be right.
21st Century Fox plans to sell off most of its assets to Disney/ABC, although Philadelphia-based Comcast/NBC had really “offered substantially more” – maybe $10 billion – according to Philly.com.
But it said last Monday, The Wall Street Journal reported Fox boss Rupert Murdoch “was concerned that a Comcast deal would be opposed by U.S. regulators and instead opted for the lower Disney offer.”
Besides a lower price, that would pretty much leave the so-called New Fox with its network, the TV stations it actually owns, and cable’s Fox News Channel and Fox Business Network. That’s it.
Add the Thursday rights fee of $3.3 billion to the cost of producing all the games, estimated to be even more than that, and you wonder how Fox will pay for it all.
That’s where you and I come in.
For years, if a TV station wanted to appear on a cable or satellite company’s lineup, then the cable or satellite company would have to pay the TV station. Otherwise, the TV station could take away the right to carry it, the station would not air on the cable or satellite company’s lineup, the viewers wouldn’t be able to watch it, both sides would blame each other, and finally there would be a secret agreement and our prices would go up.
That happens all the time.
But the TV station doesn’t get to keep all that money the cable or satellite companies pay it. The networks figure they’re the reason the TV stations are worth so much to the cable and satellite companies, and demand their share in retransmission fees.
In December, I wrote about Comcast starting to charge more just days before Christmas. Comcast is in a unique position. It’s a cable company, it owns the NBC broadcast network, the TV stations owned by the network and various cable channels.
Also, it used to be that a network would pay its affiliates in every city to carry its commercials (which kept them in business), and the programming that surrounds them (that attracts more people to the commercials and therefore more money). That has been completely reversed and it’s called – of all things – reverse comp, meaning compensation. The stations now pay the networks.
And when a network decides to pay for a special event, it asks its affiliates to help out.
Peter Rice, president of 21st Century Fox, said, “NFL football continues to be the most valuable commodity in all of media.”
Yes, ratings may be lower – down 9.7 percent this season after an 8 percent drop in 2016, according to ESPN – football may be available at more times, over more weeks and not even exclusive anymore, but there’s nothing else that brings America together like NFL football these days. That’s worth a trifecta: viewers, attention and money.
So Jessel reports Nathanson’s thinking is Fox will demand more money from stations in cities with NFC football teams because they air on the local Fox affiliates most Sundays.
He also says it can happen to stations in AFC markets because Thursday night games have teams from all over competing, not mostly the NFC but nearly equally the AFC.
That means Fox stations can expect a call from the network demanding more money for providing better programming – especially in cities with NFL teams – and that may not be so bad, considering what Fox airs on Thursday nights these days? (Do you know?)
And where will these stations get that extra money? Sure, selling ads for higher prices, but also demanding to charge your cable or satellite company more when its contract is up — Fox will insist they do — and that will raise your bill.
It has been estimated cable and satellite companies pay ESPN about $6 per month per subscriber. Think about what your cable or satellite bill is. Do you watch ESPN? Would you be willing to go without it and save $6 every month? If your answer is yes, then do you have a choice?
It’s the same story here, but on a much lower, local level. We may be talking about a quarter – 25 cents – every month for the local station if Fox gets Thursday Night Football. Check out your bill and see what you’re paying for local stations (as a whole) every month. And while you’re at it, see what it costs to get your regional sports networks.
And besides calling on stations, New Fox — much smaller after selling what it plans to sell — needs to make money somehow.
It has two possibilities and is reportedly looking into both.
First is to air as many live events as possible. Scripted sitcoms and dramas are expensive. Live programming, especially sports that’s also expensive, is supposed to draw viewers.
Second is to buy more stations. A TV station used to be a license to print money. That’s not the case anymore, with so much competition and paying networks instead of getting paid by them, but life isn’t so bad.
If the $3.9 billion deal goes through, Sinclair will have to sell off some stations because the Federal Communications Commission (public airwaves) and Justice Department (antitrust) ownership limits. Also, Sinclair and Tribune already own stations in some markets and compete, so the combined company would own multiple stations in one city.
Fox wants to buy some of those stations, Sinclair will be forced to sell, and New Fox will have the money from selling so much to Disney/ABC.
LATE-BREAKING NEWS: Variety is reporting Sinclair plans to sell off Tribune’s New York WPIX-TV (CW) and Chicago’s WGN-TV (independent) if the merger is approved, despite wanting to continue filling the map of the U.S. (above). The company filed that with the FCC yesterday. That would leave out two of the three largest broadcast markets in the country based on population. (New York is #1, with 6.4 percent of the nation’s households; Los Angeles is #2; and Chicago is #3 with 3 percent.) Also reported to be spun off instead of taking part in the merger is San Diego’s KSWB (Fox affiliate).
However, there is concern that in the filing, Sinclair said it has buyers for New York and Chicago, and it intends to run the stations through an “options and services agreement” with those buyers. Media watchdog groups have long criticized Sinclair for using shared-services agreements to control stations without owning them, which they see as a loophole around the FCC’s ownership rules.
Sinclair did admit there are eight cities — including Seattle, St. Louis, Salt Lake City and Oklahoma City — where it needs to sell a station to comply with FCC rules on the number of stations a single owner can have in a given market. But again, Sinclair said it has buyers for Seattle, Oklahoma City, and Greensboro, N.C., so it can continue operating those stations after a sale.
On the other hand, Sinclair also made a case it should be able to own more than one of the top four stations in Harrisburg, Indianapolis and Greensboro, N.C.
If all that sounds complicated, you should also know last April, FCC Chair Ajit Pai — appointed by President Trump — pushed his agency to loosen rules letting TV station owners “greatly increase the number of stations they own,” according to The New York Times. Then, a few weeks later, Sinclair announced its deal to buy Tribune. Coincidence? The new rules made the deal possible.
Last week, The Times learned from New Jersey Rep. Frank Pallone and two congressional aides, “The top internal watchdog for the F.C.C. opened an investigation into whether Mr. Pai and his aides had improperly pushed for the rule changes and whether they had timed them to benefit Sinclair.”
People strongly opposed to the mega-deal argue it would reduce the number of voices in media and diminish coverage of local news.
So Fox wants to buy more stations and number one is KCPQ, its Seattle affiliate in the home of the NFC’s Seahawks, and where Sinclair already owns a competing station.
Other NFL cities where Fox doesn’t already own a station are the next biggest possibilities. Keep in mind, we don’t how how the late news of Sinclair’s FCC filing and the FCC’s inspector general’s investigation could change or stop things.
I never understood why Fox has insisted on buying station in NFL (especially NFC) cities. Back in 1994, it made sense. It made a network. But consider this: NFL teams play 16 games per year, unless they make the playoffs.
Preseason doesn’t count. Those rights are usually bought locally. Not all of the NFC games air on Fox. Not when an AFC team comes to town. Not when the game is on Sunday or Monday nights, or Thursday night until now.
And a competing station can be the local team’s “official station” even if its network doesn’t carry the games. That means special promotions with the team, greater access and maybe a show with the coach. Not too bad.
So will all this work out for Fox? What about your cable or satellite bill? You just read about a lot of variables, and when the Thursday night contract ends and the number crunchers have their say through the 2022 season, the NFL’s other TV rights will be up for grabs. This could greatly determine the price of them then. And don’t forget all the other sports out there, out for rights money!
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