Broadcasting Wins Big With NFL Deals

“The thing that I am most proud of … is that we will continue to be on free television,” NFL Commissioner Roger Goodell told reporters Wednesday following news that the league had signed new TV rights extensions with NBC, CBS and Fox. “I think it’s great for fans. It will continue to allow us to grow our audience.”

The deals preserve for another nine years the mutually prosperous relationship between pro football and TV broadcasting that really got going in 1958 when NBC enthralled America with its broadcast of the NFL Championship. Fullback Alan Ameche won the game for the Baltimore Colts with a two-yard plunge into the end zone in sudden death overtime. Mercifully for the local New York Giants’ faithful, the telecast was blacked out in New York.

It’s been called the Greatest Game Ever Played, and it may have been — up to Dec. 28, 1958. But there have been many other televised thrillers since and every fan has his or her favorite. I go with the Immaculate Reception or John Riggins’ fourth-and-one dash in Super Bowl XVII. The memorable moments keep piling up. Did you happen to see the Rev. Tebow’s lastest fourth-quarter comeback against the Bears on Sunday?

Now we know the long and happy tradition will continue at least until 2022. That’s when the new nine-year extensions are set to end. (There are still two seasons remaining on the current contracts.)

Without doubt, the NFL is the biggest programming prize in television. Each week, the games attract huge numbers of people in the primes of their product-consuming lives. Last week, NBC’s Sunday Night Football was TV’s No. 1 show. Nothing else was close. And fans tend to watch football live, commercials and all. If they use DVRs, its only so they can watch the game (and a lot of the commercials) a second of third time.

The Super Bowls are cultural phenomena, drawing tens of millions of viewers even when the games are lousy. And lately the games have been anything but lousy.

“The product is so important, and it’s such a foundation for CBS that the longer we can lock it up, the better it is for us,” CBS Sports Chairman Sean McManus told the New York Times.

This kind of programming doesn’t come cheap. Under the new deals, the networks combined will pay on average a little more than $3 billion a year for pretty much the same packages. CBS and Fox get the Sunday regional games, NBC gets Sunday nights and they all take turns with the Super Bowl. The $3 billion-plus translates to more than a 50% increase over what the networks are paying now.

The extensions send a wonderful message about broadcasting and the network-affiliate partnership at the heart of it. They say that broadcasting is here to stay and will continue to be the dominant television medium. It’s not going to be cable or satellite or streaming or mobile apps or anything else the technologists conjure up over the next decade. It’s going to be broadcasting — the biggest media stage of all.

To me, the message is loud and clear. But not everybody seems to hear it. The current FCC, for instance, is driving a spectrum policy that treats broadcasting as if it were an artifact of a bygone era, something to be tolerated and then gently led into the home of forgotten media with 45s and eight-track players.

Unlike FCC Chairman Julius Genachowski, Goodell, I think, sees that the over-the-air element of TV broadcasting is not incidental, but central. It means that everybody everywhere gets to watch the home team free or charge and build a lifetime of loyalty. Check that Goodell quote up top again: “It will continue to allow us to grow our audience.”

Wall Street investors also seem to be deaf to the power of broadcasting. Perhaps mesmerized by the gadgetry of Silicon Valley and uncertain about the steadiness of the retransmission consent revenue stream, they have been eschewing the pure plays and devaluing companies with large broadcasting components.

“For 30 years, we’ve been reading about the possible demise of broadcasting,” said NAB spokesman Dennis Wharton. “They were wrong then, and they’re wrong now.”

That broadcasting is still in the game is due to retransmission consent. It’s has given the TV the wherewithal to compete with cable networks that have always enjoyed the dual revenue stream — advertising and programming fees from operators.

In 1992, Congress granted TV stations the power to stop cable operators from retransmitting their programming without permission — that is, without compensation. It was slow coming, but broadcasters collectively are now getting more than a billion dollars a year in retransmission consent revenue.

Affiliates haven’t much liked the idea of sharing their hard-earned retrans dollars with the networks. But they really can’t complain much now. They can see where the money is being spent. Strong networks make strong affiliates.

According to SNL Kagan, in 2014, the first year of the new nine-year deals, Fox will collect $704 million in retrans fees, $408 million directly from its O&Os and $296 million through its affiliates. The total retrans jumps to $800 million in 2015. The CBS and NBC figures are lower, but have similar trajectories.

SNL Kagan’s forecasting ends with 2015, but I don’t think that it is much of a leap to say that retrans will likely more than cover each of the networks’ entire NFL liability and then some in the out years.

That’s, of course, if the FCC doesn’t screw things up by tampering with the retrans rules and upsetting the negotiating balance.

As I have written here before, TV broadcasting has been decimated by the loss of big-time sports to cable over the last three decades — boxing, baseball, basketball, college football. With its bloated programming fees, ESPN even managed to insert itself into the NFL picture in the late 1980s. It took over Monday Night Football from poor corporate cousin ABC in 2006.

I’m still smarting over CBS’s failure to hang on to the NCAA’s basketball finals in early 2010. Under the 14-year contract, CBS will alternate the Final Four with Turner staring in 2016. Maybe CBS was looking ahead, saving powder for the big prize.

In any event, thanks to retrans and an unflagging faith in their own futures, NBC, CBS and Fox have finally stopped cable way out of field goal range.

Harry A. Jessell is editor of TVNewsCheck. You may contact him at 973-701-1067 or [email protected].