Who’s Going To Score With New NFL Games?

Media buyers, who spend billions of their advertiser clients’ ad dollars in National Football League telecasts, are excited over the prospect of the league adding a second, eight-game Thursday night TV package beginning with the 2012 season, and believe the 500 or so new commercial units in those games will be gobbled up in an instant.

The games would air during the first eight weeks of the season. The NFL Network telecasts eight games during the second half of the season.

While the NFL is not commenting on the initial report in late June by Sports Business Journal that the league will be seeking as much as $700 million for the new package, media buyers say whatever network wins the rights will not be hurting for advertising.

“More is not less when it comes to the NFL,” says Sam Sussman, who oversees TV sports buying at Starcom. “Advertisers will absolutely embrace the new package. Eight more games will not even approach the saturation level and demand for NFL games.”

“You don’t have to worry about viewer saturation with the NFL; it hasn’t reached there yet,” says Adam Schwartz, senior buyer and sports specialist at Horizon Media. “We are still trying to get as many NFL ad units for our clients as possible.”

Kevin Collins, SVP, director of national broadcast at Initiative, where he oversees the Miller/Coors account, says, “The NFL is the No. 1 sports brand. Based on what’s being offered right now in broadcast primetime for young men, I’ll take another broadcast package. But it doesn’t really matter where the package ends up. The more supply, the better.”

But don’t expect the media buyers to overpay for commercials. “We plan to pay fair market value,” Collins says. “We’re not  going to pay ridiculous rates just to help them cover their rights fees.”

And those fees are not cheap.

If the new NFL package is sold in the $600 million-$700 million range, that would mean each game would cost the network that wins the rights between $65 million and $88 million a game.

With only about 65 commercials permitted by the NFL per game, the televising network would have to charge between $1 million and $1.3 million per commercial to cover its cost for the rights fee. But to do that, they would have to draw about 25 million-30 million viewers per game and that’s not going to happen.

In other words, whatever network steps up would have to cover an advertising shortfall of a few hundred million dollars on the package each year.

And that’s why the media buyers believe the games will end up on cable — ESPN, Turner (TBS, TNT or Tru TV) or Comcast’s Versus. They can draw on the hefty programming fees from the cable and satellite operators to subsidize the games.

“They’re all established networks,” says Horizon’s Schwartz. “Some people were skeptical that people wouldn’t watch the NCAA tournament on Tru TV this year, but the audiences found those games and it worked out very well for them. And Versus is now part of NBC.”

All three have big incentives to get the package.

ESPN, which already has it’s Monday Night package, would dominate primetime. It would give Turner another major sport to go with the ones it already has — MLB, NBA, NASCAR, golf and the NCAA Men’s Basketball Championship Tournament games.

And for Versus, which right now has only hockey among the major sports, it would put the network on the way to becoming the more serious all-sports network that it has been striving to become.

Versus tried to get the first NFL eight-game package in 2004, but the NFL owners chose instead to put the package on their own NFL Network as a way of boosting that network’s credibility and audience.

It is not believed that the NFL Network is a serious contender for this second Thursday night package because the NFL owners are looking to bring in revenue to help offset some of the cost of its new collective bargaining agreement that it now negotiating with the players. Putting the games on NFL Network would be a cost to the owners, not a revenue stream.

Although the broadcast networks can generally deliver bigger audiences (and charge more for spots) than the cable networks can, the retransmission consent revenue they receive from cable and satellite doesn’t come close to matching the programming fees that the cable networks get.

Nonetheless, the buyers believe the broadcast networks would be remiss if they just conceded the package to cable. “Every network needs to take a look, including CBS, Fox and NBC,” says Starcom’s Sussman. “NFL games have the broadest reach of any programming on television.”

Indeed, the NFL is ratings gold. Last season, for the third year in a row, every one of the NFL’s TV network partners showed ratings gains over the previous year.

And the number of viewers dwarfs any other type of regular broadcast programming on the Big Four networks, with only a couple of exceptions, and those shows — ABC’s Dancing with the Stars and a few of CBS’s procedural dramas — all skew older than NFL telecasts, which have a median audience age of 46. Only Fox’s American Idol has a similar median age and it is rising.

NBC Sunday Night Football averaged 21.2 million viewers per telecast last season, while Fox’s Sunday afternoon games averaged 19.5 million. CBS’s Sunday games averaged 18.2 million viewers and ESPN’s Monday Night Football averaged 14.1 million viewers. The NFL Network averaged 5.5 million viewers for its eight-game, Thursday night schedule, but the cable network is still not fully distributed.

Sussman says that most of the entertainment shows the broadcast networks now air on Thursday nights will not do as well in the ratings as the NFL games would do. “The network affiliates might rather have football there,” he says.

Brad Adgate, SVP, director of research at Horizon Media, says Thursday night used to be one of the most stable in broadcast primetime, but right now it isn’t. He points out that a total of six new shows will be premiered by ABC, CBS, Fox and NBC on Thursday night this fall, and says the odds of most of them succeeding are slim.

On the other hand, Adgate says, scheduling football on broadcast networks in September and October does have a downside.

“I don’t know if any broadcast network would want to disrupt their schedule so early in the season and have to deal with replacing the three primetime hours when the eight weeks are over,” he says. “The upside to the NFL games is that they get huge ratings. The downside is that once those eight weeks are over, how you program the network for the rest of the season is fraught with risk.”

Adgate says Fox had trouble finding viewers for its fall entertainment programming when it carried the entire MLB post-season playoff package in October and then had to go into the November sweep month with shows that hadn’t been on the air for a month and compete with shows on other networks that had already developed their audience.

Fox ultimately gave up half of the post-season MLB package so it wouldn’t have to preempt as many entertainment shows.

None of the broadcast network sports divisions would discuss their level of interest with TVNewscheck, nor would most of the cable networks.

ESPN issued a statement that read: “We are very pleased with the success of the Monday Night Football package on ESPN. The new package is something we’ll give a serious look.”

TVNewscheck also reached out to execs at the networks’ affiliate boards, but they did not respond to requests for comment.

The eight games for the new package will come from current games in the CBS and Fox packages (four games from each), which is not making those networks happy. An executive from one of those networks said if they give up the games, the NFL is going to have to give them some type of give-back and that will most likely be in the form of ad units.

The thinking is that in exchange for taking the games away for the new package, the NFL will allow CBS and Fox to add a certain number of ad units to their other NFL game telecasts since the league mandates how many commercials can be sold in each game.