After two seasons of steep ratings declines, the NFL is up 3% so far this season. But broadcasters should still worry about their most important programming. Renewal negotiations with the NFL loom and broadcasters may face competition for the rights from streaming companies and wireless carriers that may drive up the prices.
Welcome news for broadcasters appeared in my cluttered email queue yesterday afternoon. It was the Week 4 NFL ratings (total viewers, live+SD) aggregated and crunched by securities research firm MoffettNathanson — and the numbers were up a whopping 19% from Week 4 last season. The big week pushed season-to-date ratings into positive territory. They were up 3%.
CBS and Fox did particularly well for the week, posting gains for their Sunday afternoon broadcasts of 27% and 22%, respectively. The only sour note came on Thursday night. Fox’s broadcast of the shoot out between the Rams and Vikings was down a percentage point from last year’s Week 4.
It is just a snapshot on the season that still has a long way to go. But it should encourage the networks and their affiliates who pay plenty for the rights and, to varying degrees, see the NFL as critical to their futures.
Perhaps it represents the beginning of a turnaround for the NFL, which has been losing big chunks of audience the last couple of years. Viewership was off 9% in 2016 and 7% in 2017, according to MoffettNathanson.
If viewers are returning, it may be because some of the controversies that have swirled around the sport in recent years — anthem protests, misbehaving players, compensation for CTE victims — seem to have abated. You can now enjoy a game without thinking you are making a political statement. Rooting for a team is a unifying experience rather than a divisive one.
The ratings, of course, are key to doing business today. As we reported a couple of weeks ago, the broadcast networks and ESPN have sold some $2.1 billion in advance advertising. If the ratings are high, they can sell their remaining inventory at a premium. If they come in low, they have to give it back as make-goods.
But what the ratings don’t tell you is how many people will be watching next year or in three years or in five. That’s unknowable.
Based on the 2016 and 2017 shortfall, you could conclude that the NFL is in a steady decline as Major League Baseball and just about every other big TV event are. Or, maybe viewership bounces back to flat or even grows a little over the next several years.
One can’t really say. Yet, the broadcast networks will soon make bids to renew some or all of their NFL contracts based in large part on their best guesses as to how many viewers the games will draw and how much they will be able to charge advertisers. Also factored in will be how much they can extract from MVPDs and their affiliates through retrans and reverse comp.
The NFL TV rights of CBS, Fox and NBC expire after the 2022 season. That may seem like a long way off, but it isn’t. In fact, because ESPN’s rights to Monday Night Football expire a year earlier, in 2021, and the rights packages are related to one another, talks about the NFL’s TV future could begin as early as next year.
Regardless of when they begin, the negotiations will be among the most decisive in the history of the broadcasting. I really don’t see how broadcasting prospers without the live mass audiences that the NFL reliably delivers week in and week out for five months of the year.
Primetime is under extreme pressure from SVOD streaming services like Netflix, Amazon and HBO and local news alone is not powerful enough to carry the industry.
Unfortunately, this time around, it may not just be the broadcast networks and ESPN sitting around the table divvying up the rights. Non-traditional media companies like Amazon, YouTube, Verizon and AT&T may want to join in the bidding. They could drive up rights fees, even if ratings continue to tumble.
Some of the NFL wannabes have shaved off some digital rights to experiment with streaming games. Last night, for instance, I watched the Patriots-Colts game on Fox, then on Amazon and finally on Twitch, a unit of Amazon that has risen to prominence by streaming eSports. (The game was also on the NFL Network. Whatever happened to exclusivity?)
There is a big question about the digital and wireless outlets. Can their platforms actually stream an NFL game in HD to 20 million-25 million people scattered across the entire country — all in real time?
Real time is critical. In an NFL where gambling will become increasingly important, bettors will not tolerate time delays that today plague streaming and wireless video. They want to see the action as it happens.
At an investors’ conference last month, 21st Century Fox CFO John Nallen almost scoffed at the idea that the streamers and carriers could steal the Sunday rights away from broadcasters.
“I don’t see … a world where the Sunday packages are not on broadcast television,” he said. The NFL considers Sunday broadcast football “sacrosanct,” a way for it to reach middle America, he said.
Nallen also said he believe the Sunday night game will stick with broadcasting. However, Nallen allowed that the digital and wireless might grab smaller rights packages and that the Monday night and Thursday night rights could be a “jump ball.”
We’ll see. Money talks and streaming technology is advancing at a blistering place. I would not be surprised if Amazon, YouTube or Facebook is able to demonstrate the ability to reach 25 million homes and smartphones in the next couple of years and cut deeply into the broadcasters’ NFL franchise.
Needless to say, the broadcast networks will have to pay more to renew NFL rights beyond 2022, even if the digital players do not come in big. That means, of course, they will have to reach deeper into the pockets of their affiliates with greater demands for reverse comp — so deep, I suspect, that the affils will not be able to grow retrans fast enough to offset it and their margins will fall.
So, yeah, it’s nice that the NFL had a great week and that all the broadcast rightsholders were able to post ratings gains for a change. It will keep the advertisers happy and coming back.
But with the NFL, such good news is always tempered by the anxiety that the next rating report could be bad and the next rights deal could be unduly onerous.
Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or here.