NFL Network Carriage Battles, Year Two
A few weeks back, Brad posted a note about Jerry Jones' appointment as head of the NFL's committee to resolve carriage issues between the league and monopoly cable providers. As we prepare for the season debut of the NFL on the NFL Network (next Thursday, Nov. 22 with an Indy-Atlanta matchup made dull by the absence of Michael Vick), we are likely to see more stories like today's from Richard Sandomir of the New York Times. Sandomir believes the NFL bargaining position is weak, the opposite of Brad's conclusion.
Sandomir covers the basics: only 35 million subscribers, none on major cable providers such as Comcast and Time Warner; the NFL's lobbying effort at www.iwantmynflnetwork.com; and the economics of NFL scarcity of games, 70 cents per subscriber, etc. However, he cites the requirement that games on the NFL Network be carried on local broadcast stations as weakening the NFL's argument.
I have followed the RSN-league/team debate for a while and presented a couple of case studies at NASSM conferences recently. This past summer in Florida, I presented "Does the NFL on the NFL Network make cents?"
My research indicated the financial loss for the NFL Network in 2006 was around $290 million, with expenses greater than $500 million plus an unquantifiable amount of negative public relations. The NFL will shrink that lost this year as the majority of the network's expenses in 2006 were operating costs ($400 million), some of which included investment in equipment.
Clearly, the NFL on the NFL Network does not make cents, but it might make sense. The NFL-Cable battle is one of power and control. Cable operators have always had monopoly power in a given market and the increasing trend is for operators to preference networks in which they have an equity stake (e.g. Comcast and Versus).
The NFL and the Big Ten Network are lone, but powerful, voices battling big cable monopolies. Whether they win their fights or not is still to be seen. At the very least, it should raise the level of public debate regarding the monopolistic practices of cable operators, which are becoming increasingly more prevalent in the sports industry.
Sandomir covers the basics: only 35 million subscribers, none on major cable providers such as Comcast and Time Warner; the NFL's lobbying effort at www.iwantmynflnetwork.com; and the economics of NFL scarcity of games, 70 cents per subscriber, etc. However, he cites the requirement that games on the NFL Network be carried on local broadcast stations as weakening the NFL's argument.
I have followed the RSN-league/team debate for a while and presented a couple of case studies at NASSM conferences recently. This past summer in Florida, I presented "Does the NFL on the NFL Network make cents?"
My research indicated the financial loss for the NFL Network in 2006 was around $290 million, with expenses greater than $500 million plus an unquantifiable amount of negative public relations. The NFL will shrink that lost this year as the majority of the network's expenses in 2006 were operating costs ($400 million), some of which included investment in equipment.
Clearly, the NFL on the NFL Network does not make cents, but it might make sense. The NFL-Cable battle is one of power and control. Cable operators have always had monopoly power in a given market and the increasing trend is for operators to preference networks in which they have an equity stake (e.g. Comcast and Versus).
The NFL and the Big Ten Network are lone, but powerful, voices battling big cable monopolies. Whether they win their fights or not is still to be seen. At the very least, it should raise the level of public debate regarding the monopolistic practices of cable operators, which are becoming increasingly more prevalent in the sports industry.
posted by Steve Dittmore at 10:28 AM
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