The Sports Business Journal is the go to place to leak big news if you're a pro league, media company, agency, or professional team. They consistently break the biggest stories and Monday they unleashed quite a bombshell by reporting that the NFL is engaging with various television partners to broadcast 8 additional Thursday Night Games. Per SBJ:
"The NFL is negotiating with TV networks about a new early-season eight-game package that would start as soon as next season, according to several sources.
The potential Thursday night package could be worth as much as $700 million per year, the sources said. Such a windfall, providing a sudden increase in overall league revenue, could help soften the blow to the players from the emerging labor deal in which they are likely to receive a smaller percentage of revenue than they previously have received.
The new package would not affect NFL Network’s schedule of live games, as the league has decided to keep its channel’s eight-game Thursday night slate in the second half of the season intact."
The article goes on to say that this could be for next season (2012) and that their current contracts with Fox and CBS allow them to pull these games from their lineups. Most importantly, SBJ pegs Versus and Turner as the leading candidates to acquire this package of games with ESPN, Spike, and FX also at least exploring the possibility of bidding on the package.
In a nutshell this is huge news. Not only would fans be treated to an additional nationally televised game for the first half of the season, but this package may serve as a kingmaker if Versus or maybe even TNT get the package in terms of building a viable competitor to ESPN.
Before we dive into that let's eliminate the pretenders in this discussion. SBJ's article states that cable providers have surcharge protection from FX. This basically means that if FX somehow got the NFL package, they wouldn't be able to raise their carriage fees to cable/satellite providers until those agreements lapsed. Historically speaking, cable channels have negotiated contingent elevated fees if they were able to procure various sports packages. By getting these agreed upon increases, cable networks have been able to more aggressively pursue packages rather than rolling the dice and most likely losing money in the short term. With FX not having any provisions that increases revenue from cable and satellite providers, $700 million is going to be too pricey for them.
Spike airs the show Manswers and therefore they are eliminated.
ESPN seems like a logical option but they've really built a strong following with their Thursday night college football coverage. It's doubtful they'd swap out profitable programming on ABC on Thursday night or bump their college offering so ESPN2 would either have to be the destination for the package or maybe for the college package to move to. Either way it seems like a lot of money even for ESPN when they already have programming during that window. While it's going to be painful for them to be on the sidelines of this discussion, I think they'll ultimately sit this one out. If it was the rights for Thursday night games in the second half of the season, I think they'd be much more open to it as the college football season winds down weeks in advance of the end of the NFL season.
That leaves us with Versus and Turner and the potential opening of the door for both networks to make a big play towards ESPN...
Turner is interesting because they've adopted a "spread the wealth" type approach with their sports content. Turner currently spreads PGA Golf, Nascar, NBA, MLB, and March Madness across TNT, TBS, And TruTV. Nobody is really confident where the NFL package would land if Turner would get the rights. Currently Turner's strategy is something like this:
- TNT= Drama. Tons of basketball, Nascar, reruns of Law & Order, Bones, Angel, random original programming, old movies, and some March Madness. It works for them and TNT makes money and is a major channel.
- TBS= Funny. A couple dozen baseball games, reruns of sitcoms, some random original programming, old movies, and some March Madness. It works for them and TBS makes money and is a major channel.
- TruTV= Creepy. No sports until March Madness and then a bunch of crime and mystery focused shows. The channel is still in it's infancy but has an audience.
Adding the NFL is possible to any of these channels and TNT has actually had an 8 game NFL package in the past. The NFL package also opens the door for Turner to consolidate all of their sports programming onto one channel. Imagine TNT with the package of NFL games, their continued NBA coverage, and having the MLB coverage move over. You could still rock Jack McCoy 4 hours a day and air movies to fill the dead time. You could also acquire some additional sports programming (college perhaps....maybe even Notre Dame football as I don't know if NBC will continue to feature them if they get a major conference's rights) or even experiment with original sports programming. Turner currently owns or has partnerships with the likes of the NBATV, NBA.com, Golf.com, and Sports Illustrated. Given this wealth of assets I think it's plausible Turner looks at relaunching TNT as a sports focused property. TBS will suffer but the synergy between MLB and TBS has always seem marginal at best. TBS is "Very Funny" and MLB has always been kind of a hidden asset of the network that many sports fans forget about. I bet you if surveyed 100 sports fans about MLB on TBS, over half would still think the network just aired Braves games.
For Turner, the addition of the NFL package could signal a change in strategy. For Versus, it could catapult them past ESPN2 and put them firmly on the map as ESPN's true cable contender. For over a year people have been analyzing how Comcast/NBC/Versus could utilize their synergy to mount an offensive to ESPN's dominance. But it's been tough going thus far mainly due to timing. The network had to focus on defense in retaining the Olympics and the NHL. Their one offensive attempt was nipped at the finish line as Fox and ESPN made a last ditch partnership to retain the Pac 12's rights as Comcast was poised to add them to the fold.
Such a move would have started the drum beats towards a clash of the media companies but the odd alliance of Fox and ESPN has put Comcast in a holding pattern with no major television rights coming up for bid in the near future. Grandeur of competing with ESPN would have to be put on hold and the idea of adding more households, higher subscription fees, and avoiding embarrassing and detrimental distribution standoffs like their 8 month absence from DirectTV would have to wait.
But the gods have potentially smiled on Comcast and in particular Versus. In "Those Guys Have All The Fun," the authors cite ESPN gaining NFL games as one of the most critical turning points to the network's trajectory. Even though it would just be an 8 game package it would be a huge shot in the arm to the network and one that works on so many levels. It's really the perfect fit for Versus and here is why:
- 8 early season games would essentially end their package right when the NHL season starts. While Versus does have some college football programming, this gives the channel some MAJOR potency during the week and would grow the monthly audience of Versus by leaps and bounds.
- ESPN owns Thursday night with their college games. Versus would not only gain a great package but it would eat into their biggest competitor.
- The package takes away games from Fox and CBS, two other competitors.
- Versus and NBC combined would have more games than ESPN. For 8 weeks Comcast would have 2 nationally televised game a week. ESPN/ABC, CBS, Fox, and the NFL network all don't have that distinction.
- Some cable providers haven't yet put Versus on their basic packages or in the case of DirectTV have pulled them off the air rather than paying increased fees. Operators who are often competitors on both the media side and the cable side are cutthroat in these discussions and would lose all leverage in trying to negotiate with Versus. They were comfortable taking Versus off the air and pissing off college football, hockey, bull-riding, and racing fans, but if you add the NFL onto that list, you cross a threshold of relevance that you become submissive to.
At this point, I don't think the NFL can walk away from selling this package of games. $700 million a year works out to $20 million+ per team and given the players are holding the line with the new CBA and the idea of moving to an 18 game schedule, this is a lot of money that is low hanging fruit. The NFL also would then dominate three nights a week of television with three nationally televised games all season long, something that would further the reach of the sport.
I think we'll likely see Versus walk away with the package as they stand the most to gain by adding it although Turner is viable. FX and Spike are not really options and I'm sure ESPN will meddle as much they can before walking away without being able to make a real bid.
You'd have to think that FOX, CBS, and ESPN are a bit irritated by this development as this package will elevate a media company closer to their stature while also taking away programming and audience from them at the same time. Regardless of who wins the package, it will be interesting to see who the winning network will install in the booth.