ESPN to pay $15 billion for NFL rights

[nytimez]

Yes, $15 billion, with a B, to extend Monday Night Football for eight years. In case anyone was wondering who still wears the pants in the Disney family:


ESPN cuts new football deal as sports rights fees keep rising


I can't help but think that this will come back to haunt the company in a few years... I know NFL rights are worth a lot, but in a shrinking economy with no sign of turning around, they're paying a huge premium to show football games.

 

[Virtucomp]

I can't help but think that this will come back to haunt the company in a few years... I know NFL rights are worth a lot, but in a shrinking economy with no sign of turning around, they're paying a huge premium to show football games.

I think that goes to show you how much the ads are worth to ESPN. The money has to be high enough from the sponsors to be able to get that money back. No matter what the economy is people will still drink beer and watch football.

 

[tjkraz]

NFL is the business to be in these days. Ratings just keep going up and up and I can't imagine ad prices have suffered much, if at all. The main advertisers (beer, soft drinks, snacks, sports drinks, shoes & other sports apparel) are pretty recession-proof and couldn't ask for a better platform to reach their customers. When times get tough, people stop traveling, going to movies, etc. But NFL football is "free" to anyone with basic cable.

Prices for Super Bowl ads have continued to climb. There's a story that the 2012 Super Bowl ads are nearly sold out at roughly $3.5 mil per 30 second spot. That's up from about $3 mil last year. I know the ESPN deal doesn't include any Super Bowls but that trend is probably mirrored in all national broadcasts. One story I read said overall NFL ad rates are up about 9% over the prior year.

Monday Night Football was the most watched cable TV program last year and it holds records for the top 10 all-time highest cable audiences. Four of the top 10 records were set last year.

People just keep watching the stuff.

NFL also has a decade of labor peace locked-up so there's no risk to ESPN in that regard.

 

[Disneyman_10]

Maybe ESPN will host the super bowl one day.

 

[nytimez]

I think that goes to show you how much the ads are worth to ESPN. The money has to be high enough from the sponsors to be able to get that money back. No matter what the economy is people will still drink beer and watch football.

NFL is the business to be in these days. Ratings just keep going up and up and I can't imagine ad prices have suffered much, if at all. The main advertisers (beer, soft drinks, snacks, sports drinks, shoes & other sports apparel) are pretty recession-proof and couldn't ask for a better platform to reach their customers. When times get tough, people stop traveling, going to movies, etc. But NFL football is "free" to anyone with basic cable.

Prices for Super Bowl ads have continued to climb. There's a story that the 2012 Super Bowl ads are nearly sold out at roughly $3.5 mil per 30 second spot. That's up from about $3 mil last year. I know the ESPN deal doesn't include any Super Bowls but that trend is probably mirrored in all national broadcasts. One story I read said overall NFL ad rates are up about 9% over the prior year.

Monday Night Football was the most watched cable TV program last year and it holds records for the top 10 all-time highest cable audiences. Four of the top 10 records were set last year.

People just keep watching the stuff.

NFL also has a decade of labor peace locked-up so there's no risk to ESPN in that regard.

I don't doubt that it's worth a lot. I just have to wonder if it's going to be worth $15 billion in a few years, no matter how much beer people are willing to drink while they watch football.

They're also counting on the fact that the cable TV model will remain basically what it is over the next decade... but what happens if more people start to "cut the cord" in a few years and ditch cable in favor of online entertainment?

Again, I'm not saying people will stop watching football. They won't. Of course they won't. But it seems to me to be an awfully high price to pay at a time when there are a lot of question marks and uncertainties. I mean, it's $800 million a year more than what they're paying now, and far more than any of the other networks are paying for their NFL packages (yes, I know, MNF is a different beast, but still...).

 

[skiingfast]

But it seems to me to be an awfully high price to pay at a time when there are a lot of question marks and uncertainties. I mean, it's $800 million a year more than what they're paying now, and far more than any of the other networks are paying for their NFL packages (yes, I know, MNF is a different beast, but still...).

I think people watching sports at home is one of the smallest question marks. It's a huge part of American and Foreign culture because it's one of the cheapest forms of great entertainment.

Besides most people who know about tv costs know that ESPN is the most popular and expensive network to subscribe to. A part of that reason is MNF.

 

[nytimez]

I think people watching sports at home is one of the smallest question marks. It's a huge part of American and Foreign culture because it's one of the cheapest forms of great entertainment.

Besides most people who know about tv costs know that ESPN is the most popular and expensive network to subscribe to. A part of that reason is MNF.

You're missing the point. People will still watch sports at home. I never said that's a question mark. But giving the direction of the market and the economy, I think there is a question mark over the eventual willingness of companies to keep paying increasing costs -- dramatically increasing costs -- to advertise during football. The number of companies even capable of doing so may shrink.

In any case, we'll all see how this turns out in a few years.

 

[umichigan10]

Of you think this is insane wait until CBS, Fox, and NBC pay fir their contract renewal, especially the 1st 2 since they carry multiple games every week

 

[Chef Louis]

The article above doesn't say what is included in the deal. Here is a snippet from an espn release.

The agreement includes 17 Monday Night Football games a season through 2021, an additional 500 hours of new NFL-branded studio programming (beginning immediately), extra highlights on all platforms, coverage of the Pro Bowl and NFL draft, the ability to show Monday Night Football and NFL studio programming on the WatchESPN app, and rights for ESPN Deportes and international networks, including regular season, playoff games and the Super Bowl in 144 countries.

Having the rights to show the super bowl in 144 countries doesn't make it look to be such an ridiculous deal.

http://espn.go.com/new-york/nfl/story/_/id/6942957/espn-nfl-television-deal-keeps-mnf-network-2021

 

[nytimez]

The article above doesn't say what is included in the deal. Here is a snippet from an espn release.

The agreement includes 17 Monday Night Football games a season through 2021, an additional 500 hours of new NFL-branded studio programming (beginning immediately), extra highlights on all platforms, coverage of the Pro Bowl and NFL draft, the ability to show Monday Night Football and NFL studio programming on the WatchESPN app, and rights for ESPN Deportes and international networks, including regular season, playoff games and the Super Bowl in 144 countries.

Having the rights to show the super bowl in 144 countries doesn't make it look to be such an ridiculous deal.

http://espn.go.com/new-york/nfl/story/_/id/6942957/espn-nfl-television-deal-keeps-mnf-network-2021

People only watch the Super Bowl in one country. But maybe ESPN is hoping that'll change in the coming years.

 

[tambam500]

Football is what makes ESPN the money...everything else is just fillers. Having the exclusive rights to football is huge and it will make them tons more money then they would even spend on it.

 

[skier_pete]

You're missing the point. People will still watch sports at home. I never said that's a question mark. But giving the direction of the market and the economy, I think there is a question mark over the eventual willingness of companies to keep paying increasing costs -- dramatically increasing costs -- to advertise during football. The number of companies even capable of doing so may shrink.

In any case, we'll all see how this turns out in a few years.

The reason Football gets the revenue it does is while cable has split the TV markets so that the # of eyes on any one channel are going down, Football remains a bastion of high ratings. And the reason they can continue to charge more and more for advertising is continues to be what people watch...and there is so few places where an advertiser can get there message out to the true masses. It seems like a lot of money, but (A) it's probably market value and (B) if ESPN loses football it becomes near worthless. This is sort of a no brainer. Wait'll you see what CBS, FOX and NBC end up paying.

 

[XGrumpy1]

I guess that's what a NFL contract gets. Hopefully the players will get their share!

 

[Oglet]

I guess that's what a NFL contract gets. Hopefully the players will get their share!

Forget the players, they already get a big enough share.

 

[doconeill]

People only watch the Super Bowl in one country. But maybe ESPN is hoping that'll change in the coming years.

It is definitely watched in other countries. I've got people from the UK in the fantasy league! I don't know 144 countries that carry ESPN though...

All that other crud that is part of the license doesn't explain the cost of it.

Reportedly they paid a 60% premium over the last license fee for it. Now, this is primarily for MNF, which move from ABC to ESPN because they couldn't justify the network primetime slot any longer, and when NBC wanted back in they didn't want MNF at all, they wanted a Sunday night game, because THAT'S where the ratings were...

The only thing really changing in this deal is the cost of our cable bill...because Disney/ESPN is definitely going to highball the carriage fee for ESPN when each negotiation comes up...

 

[Jason71]

Football (and sports in general) may well be the last "TIVO-proof" programming out there. It really is the only thing I watch live these days. That makes commercial time on the games very, very valuable.

 

[doconeill]

Football (and sports in general) may well be the last "TIVO-proof" programming out there. It really is the only thing I watch live these days. That makes commercial time on the games very, very valuable.

True. Another case I'm currently seeing, as well as some of the TV execs, is for the "big event" shows, like season finales, big reveals, etc. and especially for the reality competition style shows, not because of water-cooler talk the next day, but because of the immediate feedback seen on Twitter and Facebook. Networks are starting to play in to it, with live "Tweet-Ups" with the stars discussing the episode live. Interestingly, this is causing issues more for left-coasters, because they see they often can't even get the episode for another two hours...

But advertising already takes into account time-shifting, but to a certain degree. There are several ratings available: Live, Live+1, Live+7, but the current one they pay the most attention to is "C3" (essentially Live+3, which is live viewers + 3 days of DVR playback). From what one of the network guys I know told me, studies current show little advertising skipping going on in that time period.

Edit: Just adding - looking at some old Live vs. C3 numbers, Football rarely sees an increase of more than 0.2 when taking into account the DVR viewership - but scripted programming can jump up by a full point or more.

 

[Golf4food]

NFL is King. ESPN/Disney won't lose money on this no matter how much they ponied up up front. Sports is all I really have to see live anymore. I don't mind DVRing anything else and skipping the commercials, but I prefer to see sports, especially football, live as it happens and see all the ads as a result.

 

[nytimez]

Saw this in the NY Post and couldn't help but think of this thread:

Since 2006, domestic sales of Michelob, Michelob Light and Bud Select -- all Busch brands -- have dropped 72 percent, 64 percent and 60 percent, respectively, marking the three most-dropped beers in America.

Fewer drinkers are enjoying the high life as well.

MillerCoors’ beer brands Milwaukee’s Best (down 53 percent), Old Milwaukee (52 percent), Miller Genuine Draft (51 percent) and Milwaukee’s Best Light (34 percent) were Nos. 4 through 7, respectively, on the inauspicious list.


Yes, the beer industry loves to advertise during sports: It's live, the dominant audience is male and it's DVR-proof. But I don't think they'll pony up unlimited money in the face of dramatically shrinking sales.

Also, to Doc -- sorry, but I have to disagree with you. You may have people from the UK in your Fantasy League, but the Super Bowl broadcast does poor numbers overseas. When I worked at a network that had the game, we had some ridiculously high percentage of the overall audience. I forget the number, but it was in the 90s -- and it may have even been in the high 90s, with most of the rest of the viewers in Canada and Mexico.

You have to remember the Super Bowl airs in the middle of the night in Europe and mid-morning in Asia -- Monday morning. As pointed out elsewhere in this thread, the appetite for recorded sports is limited. What I'm saying is, the 144 countries that ESPN will show the Super Bowl in will not generate much revenue.

Bottom line is they're paying all this money for Monday Night Football, and while I don't have a hard time seeing why it's worth a lot -- quite a lot -- I'm having a hard time seeing how it's worth as much as ESPN just promised to pay.

 

[doconeill]

Also, to Doc -- sorry, but I have to disagree with you. You may have people from the UK in your Fantasy League, but the Super Bowl broadcast does poor numbers overseas. When I worked at a network that had the game, we had some ridiculously high percentage of the overall audience. I forget the number, but it was in the 90s -- and it may have even been in the high 90s, with most of the rest of the viewers in Canada and Mexico.

Your statement was it was watched in "only one country". It is watched in many others, and it is increasing in popularity. Sure, percentage-wise the U.S. completely dominates the viewing audience, which means very little income will be seen from the international market, especially outside North America.

"Poor numbers" is also relative to the audience in those countries, not relative to the total viewership. They may still be poor, but apparently worthy of carriage there at whatever fee the NFL (or the network if its just a rebroadcast) sets.