It’s common to judge the strength of a business by its bank statement, but sometimes it’s what a business turns down that indicates how strong it is.
Case in point: The National Football League. When NFL executives decided to take eight regular season football games and put them on its own cable outlet, the NFL Network, it turned down more than $400 million.
Comcast Corp. reportedly offered that much money to take the eight-game package of Thursday and Saturday games and air it on its new ESPN-wannabe outlet, OLN. But the league believed the package was worth $500 million.
It ultimately decided to air them on the NFL Network, whose offices and studios are in Culver City.
Of course, it’s not like the league was desperate for the money. Its recent bevy of deals that take effect for the 2006 season are worth $3.7 billion annually and total $16.2 billion over the length of the deals, which range from five years (El Segundo-based DirecTV, $3.5 billion) to eight (ESPN, $1.1 billion). NBC ($3.6 billion), CBS and Fox ($8 billion combined) have six-year deals. The NFL more than doubled its revenue over the previous contract.
“We decided it would be best presented on our own network, which has developed so rapidly that the time was right to add regular-season games,” NFL Commissioner Paul Tagliabue said.
The move should reward the NFL in three ways:
Industry execs say the games should more than double the network’s subscriber base, which currently sits at 40 million homes with 100 cable affiliates, plus satellite heavyweights DirecTV and the Dish Network and the new Verizon TV outlet.
Also, the decision gives the NFL the option of placing those games with a broadband distributor, thus gaining another fee and a chance to grab a significant piece of the burgeoning field.
Finally, it retains those games as a possible addition to any new mobile phone deal the league signs.
The news was greeted with enthusiasm at NFL Network offices in Culver City, which sees it as a chance for the network to rival ESPN.
“I always thought we were more than what some people called a ‘fledging niche,’ ” said Rich Eisen, the anchor of the NFL Network’s prime show, “Total Access.”
“But with the games, we become even stronger. The cable operators who have said we weren’t worthy of distribution now have to consider what its subscribers want. The NFL is the gold standard. We never had a perception problem with the public, only the cable operators. That should change now.”
TV analysts agree. “People want NFL programming, and subscribers will be heard if cable companies decided to air gardening networks and not the NFL Network,” Marc Ganis, of the consulting firm Sportscorp, said last week.
The NFL Network could grow to become the league’s own ESPN.
“We have large TV contracts already,” Tagliabue said. “We have the chance to grow this into a major network.”
ESPN currently charges $2.82 per subscriber, the most of any cable network. An NFL Network source said in comparison the network charges “nickels” four to be exact, 20 cents a subscriber. League officials say there is no definite plan to ask for an increase.
Comcast’s OLN is in 67 million homes, but it is not prominently placed on cable systems, and its subscriber fee is even lower at 12 cents a head.
By keeping the rights to these games, there’s nothing precluding the league from including them in any new deal it makes with new media. “There’s more at stake here than eight live games,” said an NFL source.
“This was our third Super Bowl, and I think back to our first, when we had been on the air for just 11 weeks,” said the NFL Net’s Eisen. “People wondered who we were, and that included people who worked for the league.
“Two years later, we’re in (more) homes and producing 60 hours of live coverage during Super Bowl week, and now we’re adding games. We’re so much more viable. This is a great L.A. story, too it may not have a team, but the NFL is operating one of the league’s most important ventures right here.”
