Category Archives: Sports TV Business

Could ESPN Kill Thursday Night Football?

In 1987, ESPN achieved something of a holy grail for the cable industry, picking up a half-season package of Sunday night NFL games, paid for with the imposition of a surcharge on the fees cable operators paid them. In 1998, ESPN picked up the full season of Sunday night games, paid for by the negotiation of clauses with distributors ramping up the fees paid to ESPN every year. This was the start of the process that resulted in ESPN charging every cable subscriber over $7 a month, far more than any other national cable network, and a key component in ESPN’s ability to acquire top-of-the-line sports rights such as the biggest college football bowl games.

In 2005, Disney was outmaneuvered in its efforts to renew both ESPN’s Sunday night package and ABC’s Monday night package, as the NFL struck a deal with NBC to move the league’s marquee primetime package to Sunday night in order to institute flexible scheduling that would ensure good, competitive games late into the season. Disney was left paying as much as it had for both of its previous packages for a single package for airing on ESPN. Ever since, ESPN has paid nearly twice as much as the broadcast networks for a package not much better, if at all, than the marginally-attractive matchups it had been getting on Sunday night. ESPN executives have chafed at this, claiming that for the amount it pays it should be getting matchups at least on par with the broadcast networks; to be sure, part of the fee pays for ESPN’s ability to use highlights across its myriad of programs, but that’s only a fraction of it, maybe no more than a fifth. But when the time came to renew the deal, after nearly a decade of knowing what Monday Night Football had become with the move to cable, ESPN ponied up nearly two billion dollars a year, once again close to double what each of the broadcast networks were paying. ESPN’s package of NFL games may be weak, but they’re a big part of what makes ESPN so valuable to cable operators, what makes it such a must-have for sports fans, and without it ESPN not only becomes a lot less valuable, but that same package of games becomes a tool an FS1 or NBCSN can use to instantly establish near-parity with ESPN.

At the same time it was shaking up its existing primetime packages in 2005, the NFL carved out a package of late-season Thursday night games to air on its own network, hoping to turn NFL Network into a cash cow that could collect hefty subscriber fees directly for the league. The package grew until it eventually took up the whole season, both to coerce holdouts to carry NFL Network and to establish the worth of a package to sell to other parties. Initially, the league was thought to be selling part of the Thursday night package to another cable outlet like FS1, NBCSN, or TNT, any of which would be salivating over the prospect of using NFL games to increase their own worth to cable operators, but instead it ultimately sold the right to simulcast and produce half a season of games to broadcast networks while also selling the right to stream games to Twitter and later Amazon. Sure, Thursday night games meant teams would be playing on a short week, increasing the risk of injury and potentially resulting in sloppy games, and the league’s policy of making each team play on a short week exactly once during the season limited the package’s ability to show marquee matchups. But Thursday night was a place to collect another pound of flesh from TV partners and air the games that made NFL Network worth paying for for cable operators, as well as a place to experiment with new formats and partners. It wasn’t like there were any other places for them to do this. Sundays and Mondays were taken.

Things have changed quite rapidly over the past few years. Cord-cutting has taken off like a rocket as people increasingly turn to on-demand streaming services for their entertainment, undercutting the primacy of linear television. In the short term, this only increases the value of live sports as one of the few types of programming people will willingly watch live, without skipping commercials, and are willing to pay for cable packages to watch, but it also changes the very nature of linear television, as it’s becoming increasingly apparent that anything your network airs that isn’t live events is just filler between live events (as much as ESPN and Fox sometimes don’t seem to recognize this). In that context, highlight rights are considerably less valuable than they used to be.

ESPN and the NFL are also looking at a future where the cable bundle collapses and the NFL can’t simply sell whatever it offers for a billion dollars to whatever cable network pays for it, which is no doubt part of the reason why it sold TNF to broadcast networks and streaming services rather than cable networks. In this context, ESPN’s future is no longer in collecting as much money as it can off the back of every cable subscriber, but in converting itself into a service offering its wares direct to the consumer, and it has less to worry about from FS1 and NBCSN – who have benefitted ESPN more by keeping the cable bundle propped up than hurt it in any way, and which now become more untenable propositions both in general and for the league specifically – than it does from Amazon and its ability to synergize sports rights with its Prime service. A package of mediocre NFL games may be valuable to cable operators that can pass on the cost to all their subscribers and that NFL fans can watch at anytime after paying for the entire cable bundle, but a subscription service offered directly to consumers can best attract subscribers by covering certain sports comprehensively, or else a broad array of important sports events that can combine to make it a must-have service for sports fans, and that single mediocre NFL game each week isn’t going to fit the bill and certainly isn’t going to be worth two billion dollars.

In that context, it’s easy to see why, as James Andrew Miller, the man who literally wrote the book on ESPN, suggested in a guest column for the Hollywood Reporter, ESPN might be thinking about going without NFL rights when they next come up for renewal, for the first time since 1987. ESPN has been removing clauses conditioning its high subscription fees on its continued carriage of NFL games from its contracts with cable operators, which makes sense when you consider the gap in fees between ESPN and NFL Network (and the fact that TNT charges more than NFLN without football or really much of anything other than NBA basketball and select NCAA Tournament games), and freeing up two billion dollars a year of spending money allows them to pay for events that offer a larger tonnage of content and may be more likely to entice more people to sign up for an ESPN subscription service.

Meanwhile, faced with a second year of headlines of declining NFL ratings, networks have begun complaining to the NFL about oversaturation of games and games being taken out of the Sunday afternoon packages. They want to move all London games back to 1 PM ET and end the “breakfast football” games that kick off at 9:30 AM ET. And they want the league to cut the Thursday night package back to eight games. That latter point would be difficult for the league to acquiesce to; all eight games would need to be exclusive to NFL Network to meet the network’s own contractural agreements with TV partners, preventing them from selling the games to another partner or a streaming service and once again forcing them to produce the games themselves, and potentially irking cable operators seeing NFLN’s tonnage being reduced to what it used to be when it was having trouble finding partners. And there’s nowhere else for it to go; again, Sundays and Mondays are all tied up. Or are they?

If ESPN decides NFL games are no longer vital to their business, if they decide to go without the NFL in the next TV contract, because of market forces that mean the NFL can’t prop up the cable bundle or any particular cable network anymore, that opens up a package of games that the NFL likely can’t sell to ESPN or any outlet looking to imitate it, but can use for whatever other purpose the league wants. They can put half the games on NFL Network, at least as long as it remains a tenable proposition within the cable bundle, and sell the remaining half to broadcast networks as they do with TNF now, or to a streaming service like Amazon, potentially selling the full season once the cable bundle completely collapses. Without ESPN preventing the NFL from doing whatever they want with MNF, the league could turn Mondays into the experimental night Thursdays are now, potentially doing away with Thursday games entirely except for opening night, Thanksgiving, and the week after Thanksgiving when both teams can be taken from the Thanksgiving games and play on a full week’s rest, curbing concerns about the league wearing players into the ground to collect a pound of flesh it’s becoming increasingly difficult to collect.

The competitive concerns motivating ESPN to keep paying up for MNF haven’t completely eased; ESPN wouldn’t want to walk away from the NFL only to pave the path for Amazon to become a competitor for sports rights. But I continue to believe that no entity that doesn’t at least control a linear television platform can truly be a player for major sports rights, and while Amazon has a lot more going for it than most Internet outlets, it’s not immune to those fundamental forces. At the very least, if ESPN continues to control a linear outlet it has a major asset to offer to sports entities, and if Amazon were to find its way onto one, and spend as prodigiously on sports rights as media companies have over the past decade, it would risk losing some of the advantages Prime has over cable networks if not recreate the worst excesses of the cable bundle. ESPN can handle creating a new competitor in Amazon while freeing up funds to maintain its supremacy in other ways, the NFL gets to continue raking in money from whatever revenue streams are available even if they aren’t as big, and players and fans could potentially find themselves in a world without Thursday Night Football and all the excesses and problems it represents and perpetuates. Everyone wins.

What Happens If Disney Gets Blacked Out On Altice?

If it weren’t for the crappy state of everything else going on in the country (including Ajit Pai seemingly being about to dismantle net neutrality) it would be an exciting time for the evolution of the TV industry, as the cable bundle looks like it’s about to be on its last legs. Earlier this month, reports came out that Viacom, Discovery, Scripps, AMC, and A&E were joining forces to form their own, relatively cheap, skinny bundle called “Philo” – the inclusion of the last of which was very surprising to me, as A&E is co-owned by Disney and Hearst, which also (separately) co-own ESPN, and just the other four companies forming their own skinny bundle is the last thing ESPN wants. But Disney and ESPN have a bigger fight on their hands. Altice, the French conglomerate that now controls Cablevision and Suddenlink, hass Cablevision’s old carriage agreement with Disney expiring after this weekend. Disney has faced contentious carriage agreements with the likes of DirecTV and Dish in recent years, which have gotten certain elements of the media worked up over the possibility of showdowns with companies that had ramped up their rhetoric about the high price of sports and stood up to regional and college sports networks, but in the end the power of ESPN was too much to resist and the companies sucked up and signed up for another round of fee increases and adding the Longhorn and SEC networks. But just days before the expiration of the agreement, there seems to be no end in sight to the Altice standoff, and plenty of signs that Disney’s luck and indispensability has run out, not just with Altice but with other cable operators as well.

Were it not for these two stories, I wouldn’t normally think the decline of the cable bundle has reached a tipping point. Large majorities of people still subscribe to the cable bundle… but they’ve now fallen below the 80% mark, and it’s clear that things have reached a critical moment. Disney trying to add yet another high-priced regional ESPN spinoff, one with significantly less value than the SEC Network, certainly looks like an ill-timed misstep that sent things spiraling down further (and Disney wants Altice to add not only ACC Network to a fairly basic package in New York City, but SEC Network as well). On the other side, Disney has announced the launch of OTT Disney and ESPN services, with the latter being limited to events that won’t hurt the value of ESPN to cable providers too much to lose but the former being stocked by Disney pulling its movies off Netflix a relatively short time after signing a big deal to put them on. Continuing the return of sports to broadcast, Fox will air the majority of next year’s World Cup matches on its broadcast network, meaning if the United States makes it, matches that gave ESPN gerbonkers ratings in the last two World Cups will air on broadcast where they belong, possibly even on weekdays. And while I’m still, in general, skeptical of streaming services’ ability to win major sports rights while also justifying their cost, in the wake of their Thursday Night Football deal, it’s hard for me to argue against the notion that Amazon at least has the potential to overcome most, though not all, of the obstacles I worry about (the fundamental problem of streaming being inferior to deliver live events than real linear channels, which bedeviled Amazon this past Thursday, is in my view ultimately insurmountable) to become a real player for mid- to lower-tier sports events.

There’s also the recent history of carriage standoffs to consider. Before its acquisition by Altice, Suddenlink kept Viacom channels off its systems for nearly three years, with Cable One possibly still leaving those channels off their lineups, and both companies made clear that they were just fine without Viacom’s networks. Viacom is on the expensive end of the non-sports four and, at least at the time, didn’t have as many shows with serious buzz as the others, so it could have been considered more expendable than most other Big Nine members. By dropping Disney channels, Altice would be risking a significantly larger backlash, not only from sports fans but from fans of Disney Channel’s kids shows, especially with the Yankees playing their wild-card game on ESPN Tuesday. But if it coupled dropping the Disney channels with a significant drop in customers’ bills, it could gain more than that in goodwill from non-sports fans.

Meanwhile, sports and Disney fans aren’t as out of luck as in the carriage disputes of the past, thanks to online cable providers like Sling TV. No service carrying ESPN would cost less than the $10-15 that’s likely to be the most Altice would refund customers; Altice’s moves wouldn’t totally break up the cable bundle unless they dropped multiple companies’ programming. But what would hurt Altice, but is likely to hurt Disney more in the long term, is if customers dropped Altice’s TV service entirely in favor of Sling or a more comprehensive service like PlayStation Vue, DirecTV Now, YouTube, or Hulu. Based on listed prices, dropping down from a TV+Internet bundle to just Internet should save $20/month with Optimum for New York customers; throw in fees charged only to TV customers, and that could be enough to justify getting one of the online bundles for $35/month (and that’s assuming they don’t drop Optimum entirely for Verizon FiOS). Sports and Disney fans that drop Altice’s TV services entirely are no longer directly putting pressure on Altice to add them back to the lineup. If that gives Altice enough backbone to leave Disney off the lineup entirely, especially if people with no investment in those networks start telling them not to restore them and threatening to quit if they do (especially once Philo launches), it puts Disney, and ESPN more specifically, in a very tight spot financially, as well as in terms of standing up to other providers, with deals with Verizon, AT&T/DirecTV, and the old Time Warner Cable deals now controlled by Charter looming over the next two years.

In 2011, Dish chairman Charlie Ergen suggested there was room for a cable or satellite operator to position themselves as a cheaper non-sports alternative; today he thinks Altice can survive without ESPN, and he certainly must be rooting for it. If Altice is successful at saying no to Disney and ESPN, it gives other providers, as well as potential future online providers, more confidence to say the same. Altice is not one of the larger providers, but if they manage to weather the storm and spend two years or more without ESPN on their lineup, Disney will suddenly look like an emperor with no clothes, and will find it hard for their demands to be met when they enter negotiations with AT&T, Charter, and further down the line, Comcast and Dish, and will find it especially difficult to get the ACC Network off the ground. Couple that with the pending launch of Philo representing the one thing Disney hoped to avoid by staying shackled to the cable bundle, and suddenly there’s a very real possibility that ESPN goes full-on direct-to-consumer with all of their content before the end of the decade (and indeed A&E’s inclusion in Philo starts to look more understandable if Disney thinks the cable bundle is already collapsing). Sports fans would probably still need Fox, NBC, and Turner’s networks to get all the sports they want and need, at least in the short term, but a successful standoff with ESPN would also allow cable operators to show down with those companies for lower fees and lower penetration for expensive regional sports networks. It’s possible the sports four-and-a-half will start to find that clinging to the old cable bundle model will bring down their smaller and non-sports networks more than prop them up, making a sports-specific bundle an increasingly viable proposition. At that point, Disney might just bail on cable operators and even their would-be competitors and seek to salvage whatever revenue (and data) they can for themselves.

Even if Disney and Altice reach a deal, it could still be bad news for Disney, ESPN, and sports leagues. Disney wants to ratchet up its fees and restore some of the coverage lost when they gave providers flexibility to offer skinny bundles. If Disney takes lower fee increases than they’re hoping for and keeps ESPN at present levels of penetration to avoid the catastrophe of being outright dropped, they’re going to have to budget less money for production and rights fees. Look for more layoffs to come down the pike and ESPN to scale back on what they’re willing to bid for rights as they come up early in the next decade. And the ads Altice has been running have arguably already increased awareness of just how much of their cable bill is being passed on to ESPN regardless of how much or little customers watch it, meaning if a deal is reached without ESPN being dropped, there could be a deluge of customers dropping service.

Keep an eye on how this situation develops over the next couple days, because no matter what happens, it could well mark the point of no return for the sports cable boom, as well as the beginning of the end for the cable bundle as we know it, and the start of shaping whatever comes next.

For Fans of Lesser Sports Properties, the Party is Over

Back when I was posting more regularly about the sports TV wars – in part because the wars themselves were burning brighter and the stakes seemed higher – a point I routinely made was that, as good as the wars would be for the largest, most popular entities with content that could attract large audiences to sports networks, they would be an absolute boon to lesser entities that might not otherwise attract much of an audience at all, or even enough to justify their existence, as the glut of sports networks looked for properties to fill out the rest of their time. Truly tiny leagues and conferences didn’t see much of a bump from the wars (a TV deal with CBS Sports Network only kept the UFL afloat for an additional half season) but lower-mid-tier leagues, the sort that could attract audiences approaching a million on broadcast and regularly top several hundred thousand on networks the size of FS1 and NBCSN, saw their visibility vastly increased. As I explained in my book The Game to Show the Games (and as expanded upon here previously) no sport benefited from the glut of sports networks more than soccer, even before the sports TV wars properly became a thing, as a veritable soccer boom enveloped English-speaking America driven in large measure by coverage of the English Premier League on Fox Soccer Channel and its predecessor Fox Sports World, driving NBC to not only break the bank for Premier League rights but to make it as much of a tentpole for NBCSN as the NHL.

If no sport benefited more than soccer from the sports TV boom, no single deal demonstrated the power of TV to elevate a sport more than the Premier League’s deal with NBC. NBC’s high-quality coverage, semi-regular games on broadcast television, and dizzying array of games on NBCSN only scratched the surface of what NBC would do for the Premier League in America. Perhaps more remarkable was NBC’s decision to place all the games it couldn’t fit on its linear networks on an array of “Extra Time” channels and available for streaming for any subscriber to a cable package that included NBCSN. American viewers could watch every single Premier League game live, something people in England itself couldn’t say, if only because the Premier League contracts there were arranged to protect gate revenues, especially at lower-tier clubs.

This week, NBC announced that those games not airing on NBC’s linear services would now be available on a “Premier League Pass” subscription service, no longer free with NBCSN. The headline on Re/code touting this deal focused on the “no cable subscription required” aspect of the service, which is a bit disingenuous considering games on NBC’s cable networks aren’t part of the deal, but not really any different from people who get ESPN3 from their Internet provider (or who sign up for ESPN’s long-delayed direct-to-consumer offering) and get to watch mid-major college sports and less popular events without access to ESPN’s actual linear networks. Despite its uselessness to cord-cutters, though, I was surprised to see headlines on more soccer-focused sites bemoaning what a big step backward this was for NBC’s coverage of the Premier League, with Vice Sports going so far as to claim that the move of what it admits is “the crappiest third” of Premier League games to a premium service amounts to NBC “kill[ing] America’s EPL Golden Age“.

Certainly for Premier League fans used to signing up for the cable bundle, this is a huge step backwards. $50 is a relatively steep price, though for an entire season of Premier League games it compares favorably to American sports leagues’ pay-per-view/out-of-market/streaming services, which often top $100. And it’s not like Premier League fans can save money by just signing up for Premier League Pass, since again, it doesn’t include games on NBC’s linear networks. But it’s hard to declare the loss of the least interesting, most perfunctory matchups, that were already consigned to streaming and overflow channels, as completely undermining the visibility and value of the Premier League on American television, especially since given the ongoing shifts in the media landscape, a move like this may have been inevitable. Even if Extra Time wasn’t really “too good to be true” even at the time, setting aside specialized channels and propping up the cable bundle even more was becoming difficult to justify. With Premier League Pass, NBC is pivoting towards the sports distribution system of the future, one that more specifically targets fans of various sports, that sports networks in general will have to pivot towards.

As such, I’m not sure I agree with Richard Deitsch that this is entirely about monetizing a more expensive Premier League rights deal; if so it would raise the question of whether the deal was really worth it to begin with. I think there’s a bigger picture to look at here. Going back to its days as Versus, NBCSN has staked its territory around providing comprehensive coverage of sports that might get shorter shrift at ESPN or Fox, and that’s a territory that lends itself well to providing services oriented directly at those niche sports fans. The NBC Sports Gold service already sells access to many of those niche sports bundled together for up to $70 a year, but depending on how many butthurt Premier League fans (especially those that have attached themselves to teams further down the table) swallow their pride and pony up, Premier League Pass could easily make them more money. I could easily see NBC as laying the groundwork for the day it may ultimately have to shutter NBCSN in its current form and fold many of its rights into networks like CNBC or USA as the cable bundle finally utterly collapses, folding together many of its mid-to-lower tier rights into a direct-to-consumer offering targeted at the niche sports fans NBCSN serves today. I may have felt Fox was better positioned to run down ESPN than anyone else (certainly Fox themselves did) before it turned out Fox didn’t quite have the quality of rights to convince people to turn to FS1 on a regular basis, and I’m skeptical that anyone other than ESPN will survive the collapse of the cable bundle and shift to Internet streaming, but NBC may be better positioned than any of the alternatives to pivot to marketing a national service directly to the consumer, offering a simple value proposition to fans of niche sports (ignoring the question of the fate of local sports and what it would mean for Fox and NBC). With Premier League Pass, NBC is building the groundwork and subscriber base for whenever the day may come when NBC Sports Gold has to become its main offering to sports fans.

Ultimately, I think the effect of the Internet will be to collapse any intermediate distinctions preventing a step down from the ESPN level directly to pure streaming, with the only distinction being between the resources and quality poured into that streaming, with the likes of Amazon, Twitter, Facebook, and potentially Google on the high end, down to lesser offerings oriented towards more niche audiences like Premier League Pass, all the way down to free streams where there’s no room for monetization and no budget for any but the most rudimentary setups at all. For the truly tiniest leagues, I’m already seeing signs of streaming, of various degrees of monetization, being a boon to them; when the number of channels is effectively limitless, there’s little reason not to put up a stream of every game you have so long as you have the resources for it, especially when it comes to leagues popular in their home countries that just need to export their feeds to the States. But for these mid-tier leagues that have become used to comprehensive coverage subsidized by non-sports fans who continue to subscribe to the cable bundle, the party is over. Even if you believe that the most apocalyptic scenarios still involve the vast majority of Americans continuing to subscribe to some sort of comprehensive cable bundle for the foreseeable future, there’s still clear evidence of the fear of cord-cutting and sports-free packages driving sports networks to reduce their investment in mid-tier properties that don’t drive enough viewership and subscriptions on their own to justify the level of expense the cable bundle has inflated their perceived value to. Services like Premier League Pass are the first sign of sports networks sending a message that it’s time for sports fans to pay more of their fair share of the boom of sports television that has erupted in recent years.

Is ESPN Giving Up on IndyCar?

If you’ve been paying more attention to the sports media landscape than I’ve been covering for you, you know that ESPN this past week let loose with a barrage of layoffs, firing over a hundred people including a number of prominent on-air and online personalities. Obviously, this is in part ESPN attempting to trim the fat for a cord-cutting future, one where live event rights to compel people to sign up and stay signed up for cable, or any future direct-to-consumer offering, are the most important thing for the future of the business and all else is just gravy, something only to be risked if they make enough money to justify it, a future where linear television exists primarily as a conduit for popular live events and anything else is just filling time. Hence, heavy cuts to ESPN’s journalism operations, which don’t help ESPN collect higher subscriber fees or appreciably boost ratings, and studio analysts, which are mainly relevant if at all as programming bracketing live games, especially with highlight shows like SportsCenter being less relevant with highlights being widely available online, but comparably fewer cuts to live game analysts and announcers. But not all sports are created equal. ESPN makes these cuts on the heels of a multi-million dollar agreement with the Big Ten that hasn’t even been officially announced yet, one that to an outside observer makes little sense in the context of the layoffs, but which ESPN sees as critically important, as high-value programming driving subscriptions and eyeballs and which, even splitting the contract with Fox, deprives Fox or any rival of that programming that might bestow money and credibility on them and potentially allow them to move closer to on par with ESPN (the impending launch of the ACC Network, on the other hand, looks all the more questionable). But less popular sports, especially those sports that require a large amount of personnel separate from or superfluous to your other sports, might not be worth the expense.

To my knowledge, no more than two play-by-play men have been confirmed to be fired as part of the layoffs, one of them being longtime auto racing announcer Allen Bestwick:


Before Bestwick, the last two announcers of the Indianapolis 500 were Marty Reid and, in an infamous one-year experiment marred by over-emphasis on Danica Patrick, Todd Harris. Neither is still with ESPN. During ESPN’s most recent stint covering NASCAR races, the three lead announcers for the Sprint Cup series were Dr. Jerry Punch, Reid, and Bestwick. Punch is also among those that were fired. As Bestwick’s tweet indicates, he’ll continue to serve as a lame duck for the rest of the IndyCar season, including the 500 (as will Punch), but after that? Quite possibly the only personality ESPN has left with auto racing announcing experience is Paul Page, who called the 500 all but three years from 1988 through 2004, and who currently is reduced to calling the Nathan’s Hot Dog Eating Contest and nothing else. Even discounting the play-by-play spot, if ESPN can’t replace Punch the 500 will have fewer than three pit reporters for the first time at least since ABC started airing it live, and hiring someone new would seem to defeat the point. And next year is the last year of ABC’s contract to air a grand total of five or six races, which raises the question: why would ESPN invest money in a sport when they just fired its play-by-play man and best pit reporter (as well as main alternative for the play-by-play spot) as part of attempting to cut their expenses to the bone?

ABC has felt like it’s been on its way out as a television partner of the IndyCar Series since the then-Versus network took over cable coverage in 2009; that it would renew its relationship in 2011, after the Comcast-NBC merger that would have allowed Comcast to unify coverage under one roof if ESPN didn’t want to, was somewhat surprising, but with the subsequent departure of NASCAR and the NHRA from ESPN leaving those five-six IndyCar races on ABC as the only motorsports content ESPN produces, it may be an expense ESPN feels it can’t afford when only the 500 truly produces appreciable numbers, even with Bestwick and Punch broadening their repertoire into college sports in recent years. About the only reason to keep it around is to keep ABC’s status as the only television partner the 500 has ever had, but that hasn’t stopped many other longstanding associations from changing hands in recent years – perhaps most pertinently, the move of golf’s British Open first to cable as the only home of live coverage and then to NBC, ending its long relationship with ABC and bringing major golf back to NBC after that network had its own long relationship with the US Open ended in favor of Fox. It’s easy to see ESPN throwing up its hands and letting NBC have full rights to the entire series, including the Indy 500 with coverage potentially hosted by Bob Costas or Mike Tirico, and Bestwick and Punch joining NBC’s team for IndyCar, NASCAR, or both. ESPN’s relationships with the British Open and NHRA were both bought out a year early as the new contracts began, and ESPN attempted to do the same with NASCAR; it’s easy to surmise that ESPN would not only be willing to give up IndyCar rights but surrender the final year of its deal similarly, and thus leave ESPN without any motorsports coverage for the first time practically since its founding.

All this brings me to one last important point. I’ve mentioned before what a boon the sports TV wars have been for smaller leagues and conferences that have been able to get television exposure and revenue that would have been unthinkable ten years ago, even if on relatively obscure networks. Now, however, the most immediate victims of cord-cutting might be those smaller leagues – or perhaps more to the point, mid-tier leagues like IndyCar that don’t move the needle but attract considerable expense regardless. If the firing of Bestwick and Punch suggests ESPN won’t even come to the table in the next IndyCar negotiations, IndyCar’s best bet to attract much of a rights fee in its next contract might be dependent on whether or not Fox is interested in sweeping in and picking up the rights, and Fox may balk at airing the 500 and risking a rain delay that bumps up against the NASCAR race the same day. (NBC also airs Formula 1 from Monaco the same day, but that may be less of an issue.) Otherwise, barring a surprise CBS-Turner combined bid, NBC might be able to essentially name its price, similar to where it found itself with NASCAR when ESPN and Turner abandoned ship on the sport. ESPN’s newfound frugality is very bad news for entities that don’t offer enough high-quality content to justify increased rights fees or a significant number of maintained subscriptions. It reduces the number of outlets available to them and forces them to find shelter with entities that remain vulnerable to suffering even more than ESPN if the linear cable market contracts further. If you’re banking on increased rights fees but your next contract negotiation is even a year away, and you’re not one of the major college conferences, pro leagues, major golf competitions, NASCAR, FIFA, or the Olympics, it’s time to ratchet down your expectations considerably.

How NBC Gets the Olympics Exactly Backwards

Another Olympics has come and gone, and with it another round of hand-wringing over NBC’s tape-delay policy, fueled further this time around by NBC’s historically low ratings for its primetime coverage. NBC’s primetime coverage averaged a 14.4 household rating, dominant over the rest of TV but the second-lowest mark for a Summer Games since at least 1968 and probably ever, beating only Sydney in 2000, with declines especially acute among key young-adult advertising demographics. People are still trying to figure out the reasons for the low ratings, especially since everyone expected numbers much closer to London (the highest-rated non-North American Summer Olympics since 1972), but plenty of wags on the Internet and among sportswriters are pointing the finger at NBC’s long-standing and woefully outdated policy of tape-delaying the marquee events for primetime. This, of course, despite the fact that Rio is only an hour off of the East Coast and many events, including the marquee track and swimming events, aired live in primetime, meaning if anything NBC is likely to come to the conclusion that the Games suffered because they were live, not because they were taped. London had no events live in primetime, while NBC pulled strings to get Michael Phelps’ chase for gold into the morning time slot in Beijing, putting it in primetime on the East Coast. The result: London’s completely taped coverage beat Beijing’s mostly-taped coverage, which beat Rio’s mostly-live coverage. It sure looks like tape delay helps NBC’s ratings rather than hurts them, no matter how much people on social media may whine about it.

Further fueling this attitude is the popularity of the Olympics on the West Coast, where even NBC’s live primetime coverage is delayed, and thus where the whining about tape delays reached a fever pitch, but which is perennially the region where the Olympics are most popular, something NBC Sports chairman Mark Lazarus pointed out. But the dominance of the West Coast is not what it used to be; Salt Lake City and Denver were the top two markets, but San Diego was the only other market in the Pacific or Mountain time zones to crack the top 20. In Beijing, those three markets were joined by Portland in the top 10, and at least in the first week (when Phelps raced), four more West Coast markets placed in the top 17 with higher-than-average ratings, including every West Coast market in the top 40 except for Seattle (which gets the CBC’s live coverage on our cable systems). Had that held, it would seem to suggest that, even holding the time slot and specific games constant, tape delay only improves ratings. Instead, it raises the question of whether the West Coast, and indirectly audiences in general, really are souring on tape-delayed Olympics coverage.

Of course, since 2012 NBC has allowed people to stream almost all the events live regardless of where they live, albeit with the Olympic international feed’s announcers, and NBC claims that when streaming and cable are added in (for the first time ever, NBCSN and Bravo aired coverage in primetime that cannibalized some of NBC’s audience), the Rio Games trailed only London as the second-most watched ever. Streaming, however, remains only a teeny-tiny subset of total viewing, with the total amount of streaming for the entire games accounting for as much consumption as an hour 45 minutes of NBC’s primetime coverage.

But even though live sports streaming in general has a fraction of the popularity of viewing sports on linear TV, that only gets to the real problem with NBC’s “Olympics as ultimate reality show” approach, namely that it treats the Olympics as a type of programming that is slowly losing its relevance to linear television. Indeed, as “cord-cutting” increasingly emphasizes being able to watch what you want when you want, leaving live events as the sole area where linear television retains a purpose in the face of the rise of the Internet, NBC’s approach of streaming the Games live and delaying events to be neatly packaged for its linear network seems to be exactly backwards. As I’ve said before, streaming is not and may never be well-suited for airing major live sports events, and while complaints about Olympic streaming seemed to be more about the experience of getting through NBC’s authentication and its insistence on delaying the Opening Ceremony even on the stream than the sluggishness experienced in London, if NBC continues to insist on streaming as the only guaranteed method of watching marquee events live, it will only put themselves under more and more strain, or alternately greatly increase the cost of delivering the Games smoothly, as streaming becomes more normalized as a means of watching content. On the other hand, it’s disingenuous for NBC to insist on packaging the marquee events for showing when everyone is at home and then require that those events be shown at the same time for everyone even when they’re not live; after all, not everyone has a 9-to-5 job where primetime is the most convenient time to watch the Games. There is a place for recorded, prearranged programming on linear television, but that place is heavily reliant on social media, and social media was disproportionately represented by those that didn’t like NBC’s current strategy.

By the end of NBC’s current contract running through 2032, I could see NBC’s linear channel(s) (assuming it still exists as such) sticking strictly to airing the marquee events live, while also offering its traditional packaged coverage for streaming online whenever someone wants to start it for those who want the Olympics as “ultimate reality show”. That NBC does not do this already, instead forcing both the sports and reality fans to watch tape-delayed, packaged coverage at a specific time in order to maximize ratings for that specific time and sell ads at the highest price, is a sign both of how far streaming has yet to go to achieve normalcy, and a sign of how slowly linear television is embracing its true nature and the key to its future.

Will an ACC Network Be Obsolete Before It Launches?

In 2013, a year after financially-struggling Maryland left the ACC for the greener pastures of the Big Ten, the Charlotte News and Observer obtained e-mails that circulated among the leadership of the University of North Carolina, perhaps the single most important school to the long-term survival of the ACC, showing their reaction to the news. Many of the e-mails expressed disbelief at a Sports Illustrated article that claimed that Maryland would make nearly $100 million more in its new conference by 2020, thanks to the Big Ten Network, than it would have made in the ACC, with UNC officials looking for confirmation that Maryland was going to make that much more money (indeed Maryland itself wasn’t aware of it until it started going through realignment talks). But for many college sports fans following the sports media and college sports realignment worlds, the fact that the Big Ten was making oodles more money than any other conference was hardly news, but something that had been widely reported throughout the sports media and had been fueling the current round of realignment from the start. Ordinary college sports fans and bloggers knew more about the financial disparities between the major conferences than the university presidents within them whose job it was to make informed decisions. As Frank the Tank, one of the bloggers most responsible for exposing the implications of those disparities, put it:

It would have been one thing if these were average sports fans just focused on on-the-field results, but it’s quite amazing that university leaders and athletic department officials didn’t seem to be as informed on college sports financial matters as, say, most of the people reading this blog or those that followed the reporting of mainstream media members like Brett McMurphy of ESPN.com, Andy Staples of SI.com and Dennis Dodd of CBSSports.com. It’s an indication of the insularity of many universities and athletic departments and partially explains why the inertia in favor of the status quo is often stronger than many conference expansionistas would like to believe. What we’re seeing is that it takes a real external crisis for the vast majority of power conference schools to take notice of the information that’s out there and consider switching leagues.

I thought of this upon hearing about the ACC’s move announced last week to try to rectify this disparity, which has only grown to their further disadvantage with the launch of the SEC (and Pac-12) Network, yet the circumstances surrounding it have changed considerably since 2012. The sports-network market has always been built on the con of the cable bundle, where people with little to no interest in sports see large chunks of their cable bill get shipped off to pay for sports networks, and recent years have seen one piece of news after another suggesting that bundle is being increasingly undermined. My generation sees little value in the bundle and has increasingly been “cord-cutting” to get their entertainment from sources like Netflix and Amazon, getting away from bloated bundles that exist largely to subsidize sports networks. Investors are increasingly concerned about what the trend means for the sports-network market and especially ESPN, which finds itself caught between the rock of cord-cutting and the hard place of their desire to keep the cable bundle going for as long as possible; no less an institution than Moody’s has predicted the end of the cable bundle and that regional sports networks are looking like an increasingly dicey proposition. Meanwhile, cable companies, blamed for higher prices even as they struggle to keep pace with the rising price of sports networks, have increasingly taken stands against the launch of more and more new networks, as evidenced by the carriage struggles of SportsNet LA and the network formerly known as CSN Houston, with SportsNet LA remaining uncarried even as Time Warner Cable has reduced its price and even in Vin Scully’s final season.

Against this backdrop, the ACC has been the one major college conference with a substantial number of third-tier games still airing on broadcast television through regional syndication on Raycom. Assuming broadcast stations could get their act together and ensure wide coverage without relying on the crutch of retransmission consent (hardly a sure thing), I felt that, for all the ACC may have looked longingly at the SEC and Big Ten Networks and the revenue they make, staying the course could prove to give them a massive advantage in exposure if the market flipped and the SEC Network and BTN found themselves limited to what could be a distinct minority of people willing to pay relatively large amounts of money for them or for bundles including them, especially among poorer recruits, and especially if the ACC made an aggressive move to distribute their syndication package nationwide.

Instead, last week the ACC and ESPN announced an extension of their existing media rights agreement for the next twenty years, with the launch of a new “ACC Network Plus” digital network this fall leading up to the launch of a full-fledged linear ACC Network in 2019. I’d be shocked if the cable bundle still looked anything like it does today by 2036, and frankly I’d be surprised if it still looked viable in 2019. Reportedly, the long delay for the launch is related to the expiration of ESPN’s carriage agreements with cable providers, meaning ESPN would rather hold off on the launch of the ACC Network until it can tie it in with its established linear networks. But the addition of the ACC Network to ESPN’s bundle could be what causes the bundle to collapse entirely and marks the fall of ESPN’s empire.

Cable operators have been chafing under ESPN’s tops-in-the-industry subscriber fees for a long time, with Dish Network chairman Charles Ergen suggesting in 2011, following the signing of an expensive Monday Night Football deal, that certain companies might decide to go without ESPN and market their service as a low-cost alternative for non-sports fans, and in recent years many such operators have been experimenting with sports-free packages that offer a selection of popular channels at a lower price, resulting in ESPN’s carriage falling considerably. But no cable or satellite company has taken the plunge and experimented with cutting ESPN out of their lineups entirely, instead limiting the availability of their sports-free packages to avoid violating their ESPN contracts, and online “skinny bundles” that have won considerable acclaim for being an “alternative to the cable bundle”, including Dish’s own Sling TV, have made themselves part of the problem by including ESPN and other sports networks. For now, pay-TV providers feel they must have ESPN’s high-value programming such as MNF and the College Football Playoff, even though they know it’s almost single-handedly fueling the revolt against the cable bundle, because even as the cost of sports drives people away from the cable bundle, the presence of sports is the one thing keeping people tied to it, because live events, especially sports, are the one thing linear TV does better than the Internet. The power of ESPN explains why the SEC Network, theoretically a channel of regional interest, had the largest launch in cable TV history, avoiding even the carriage battles that bedeviled the Big Ten Network.

But for as much as the SEC Network benefited from the ESPN connection, it may not have been so successful if it weren’t sufficiently valuable in its own right. The SEC and Big Ten have the most passionate fanbases and bring the most value to any sports network by a significant margin over any other conference, even any other college conference; the ACC is strong in basketball, but their football conference tends to consist of Florida State and not much else, both in terms of quality on the field and in terms of schools with passionate fanbases that can attract large audiences, and football is what drives TV deals and conference realignment. What may be more relevant to what the ACC Network has to look forward to is the fate of the Pac-12 Networks, which remains uncarried by DirecTV years after launch; it was thought the DirecTV-AT&T merger would smooth along talks, but instead it seems more likely that AT&T will drop Pac-12 Networks from U-Verse systems once that deal expires than that DirecTV will add them. According to Washington State AD Bill Moos, Pac-12 schools were hoping to receive $5 million a year from the Pac-12 Networks at this point, but instead are only collecting $1.4 million. Unlike the SEC and Big Ten Networks, the Pac-12 went it alone on their network without selling any stake to anyone that might have helped their network gain carriage (or shared in the network’s expenses), but thanks to the CSN Houston and SportsNet LA struggles – not to mention ESPN’s Longhorn Network, which recently eliminated much if not all of its studio programming – cable operators are a lot more confident in their ability to stand up to sports networks than they were in the late 2000s when they challenged the BTN.

They may not have wanted to alienate ESPN’s many loyal viewers over the SEC Network, but the ACC Network won’t bring nearly as much value to the table, and while ESPN may have largely escaped the bruising carriage battles other large programmers have fought, if they overestimate how much cable operators are willing to pay for an ACC Network, at least one large programmer may just decide they’ve had enough of ESPN pushing them around and go to war (especially since even with the wait, ESPN’s carriage deals with Comcast, Charter, and Dish Network still won’t have expired yet by 2019, meaning the ACC Network will have to stand and fall on its own merits with them). Even if they don’t, the resulting hike in people’s cable bills might just be the spur cord-cutting needs to cross a tipping point and cause large numbers of people to dump their cable subscriptions en masse – and that assumes it won’t have done so already. Cord-cutting has come a long way in just the last three years – HBO went from disdaining the possibility of a direct-to-consumer offering to offering one in less time – and there’s no reason not to assume it won’t go even further in the next three. If ESPN escapes any major controversy surrounding the ACC Network, it may only be because the popularity of the cable bundle will have shrunk enough for it not to matter, to the point that ESPN might just decide to make the ACC Network the centerpiece of their own direct-to-consumer offering. Any of these scenarios would likely result in the ACC making substantially less money than they might have planned (or, depending on the structure of the contract, ESPN taking a loss on the enterprise).

ESPN likely knows all this, and tried for a long time to dissuade the ACC from the idea, preferring to let a clause activate this summer that would have substantially increased its payouts to the conference (and which, apparently, will still activate in the interim) than to launch a network that would not only lose money or fail to achieve the conference’s goals, but would accelerate the larger trend ESPN has been trying to slow down or fight off. But all the ACC sees is the boatloads of money the Big Ten and SEC are making, even though they have no chance whatsoever at making anywhere near that much, despite the conference’s consultant, Dean Jordan, claiming that if it “performs even moderately, it’ll put the ACC in a situation where they’ll be very, very competitive financially with the upper tier of the collegiate industry”. The ACC is deluded not only about the changes sweeping the video industry, but about its own value compared to “the upper tier of the collegiate industry”. There may have been a time when ESPN could ask for any price for an ACC Network and gotten the ACC money on par with the SEC, but that time has been long past for several years now.

ESPN President John Skipper points out that 93 of the top 100 TV programs in the ratings in 2015 were sports, compared to 14 just five years ago, and takes that as evidence that live sports is growing more popular and that the insatiable appetite for it will justify an ACC network, not that linear television is growing less popular among people who don’t watch live sports. The ACC is confident that ESPN will “find a way to make this work” no matter how untenable the cable bundle becomes in the interim. But that assumes live sports will maintain their elevated position, that the economics of the video content market won’t recalibrate themselves to favor video-on-demand services and linear television becomes the specific subset of the larger video landscape delivering a specific type of content, live content of all types, that it should be, that the linear market doesn’t greatly and rapidly contract to the level actually warranted by the provenance and popularity of live events that are out there, that conference-specific networks reliant on subscription revenue and showing lower-tier games don’t become an increasingly dicey proposition when they have to stand and fall based on their target audience alone. In that case, the best-case scenario for the ACC could be that the SEC and Big Ten networks become equally untenable, and if that happens they’ll still be in better shape than the ACC. I don’t know if the ACC will ever realize the scenario they passed up, but I do know they could find themselves cursing their foolishness – especially if their decision turns out to be the proximate cause of exposing its own foolishness.

Want to learn more about all this? As this post goes up, you still have a few hours left to get my book THE GAME TO SHOW THE GAMES on your Kindle for FREE! Or you can order the paperback or get it on your Kindle for cheap anytime! Find out more about the book by clicking the cover on the sidebar!

The 200 Most-Watched Live Events of 2014

Yes, this is over a year late. I actually got really close to being far enough along to post this until I let things drop off to pursue other interests and eventually started spending all my time putting the book together.

If, as I’ve suggested, the only purpose of linear television going forward will be to show live events that many people want to watch at the same time, then ratings for live events become a particularly important category to look at, because they form the underpinning of everything else. So here are the 200 most-viewed live programs of 2014 to my knowledge, with the top 50 ranked.

Breaking news outside of primetime and other non-primetime news events are not counted because I couldn’t find any numbers for them. I’m also assuming no other evening news shows had audiences high enough to appear on the chart; I also assumed all non-audition episodes of American Idol were live, but marked the Hollywood and Vegas episodes with question marks. Events in red are news events; in blue are NFL games; in green are other sports events; in orange are awards shows; in purple are reality shows; and all other events are white. Read More »

Why the Proposed “Hulu Skinny Bundle” Will Be Set Up to Fail

The Wall Street Journal reported Sunday night that Hulu is developing its own over-the-top “skinny bundle” for release sometime in the first half of 2017. (Note: since the WSJ article is paywalled, most of this info comes from a Mutlichannel News writeup of it.)

According to the WSJ, the bundle would include, at minimum, channels associated with two of Hulu’s co-owners, Disney and Fox, including ABC and Fox owned-and-operated stations and other popular channels they own, including ESPN, FS1, and Fox’s regional sports networks. The reports I’ve seen don’t say whether the service would include channels from anyone else other than the third co-owner, NBC Universal, but one analyst speculated a little over a week ago that it might end up including channels from CBS and Time Warner, both of which have contributed to Hulu’s existing on-demand service (with Time Warner even approached about a stake in the company last year). In other words, it would include the five companies that offer substantial sports content and that, together, keep the cable bundle together. Even if Disney and Fox were only able to get the Turner networks on board, the Hulu service could conceivably be a one-stop-shop for sports fans with every nationally-televised game from MLB, the NBA, and every major college conference, every bowl game of significance, and every NCAA Tournament game not on broadcast television, plus, for fans of local teams, games of any team with an agreement with a Fox network. The main reason to get NBCU on board would be to appeal to NHL, NASCAR, golf, and soccer fans, as well as fans of teams on Comcast’s RSNs. All told, it could well be the biggest step yet towards the breakup of the cable bundle.

Which is precisely why the companies creating it, especially Disney, won’t let it be.

Both the analyst that speculated about this a couple weeks ago and the WSJ report suggest that a Hulu skinny bundle would cost around $40 per month. After slashing the price earlier this year, PlayStation Vue currently offers broadcast stations and a broad selection of popular channels, including ESPN, ESPN2, FS1, FS2, and all three of Turner’s networks that carry NCAA Tournament games, and popular networks from NBCU (but not NBCSN) and all of the non-sports four, for $39.99 a month in the markets where it carries broadcast stations. If you have an antenna and live in one of Vue’s non-broadcast markets, for just $5 more than the proposed Hulu skinny bundle, you can add most of the channels left out of Vue’s base package, including NBCSN, Golf Channel, beIN Sport, ESPNU, BTN, SEC Network, and regional sports networks. Of course, considering PS Vue dropped its price at the same time it added the uber-expensive Disney networks, it may well be operating at a loss in an attempt to spur adoption, and may hike its prices again later. Still, if the Hulu skinny bundle is competing with PS Vue at those prices, not to mention Sling TV currently offering (with the single stream package) all the ESPNs, including SEC Network, plus TNT and TBS for $25 a month or (with the multi-stream package) FS1, the Fox RSNs, and all three Turner networks for $20 a month (suggesting Sling would probably offer all those channels for around $40 once it synchronizes its packages, depending on the effect of adding the Viacom channels), there’s really little reason to sign up for the Hulu skinny bundle unless you really want NBCSN and Golf Channel or you just want to deny the non-sports four your money out of principle.

It’s hard to see who the Hulu skinny bundle would appeal to that wouldn’t be better served with Vue or Sling – which, of course, is probably the point. Disney and Fox don’t really want to do anything that would hasten the breakup of the cable bundle, so it’s not surprising they’d price it to be uncompetitive with Sling and Vue given its selection, even though they could theoretically offer a lower price since they’re not really going through middlemen, potentially setting it up to fail and giving them a reason to claim skinny bundles and going direct-to-consumer doesn’t work. If they did try to competitively price it, Disney likely wouldn’t sign off on launching it unless it had the non-sports four on board, effectively making it the same as Vue, because there’s nothing Disney fears more than cutting the non-sports four out of, and thus motivating them to become independent from, the cable bundle. (Incidentally, that same analyst that speculated about a Hulu skinny bundle, and about a skinny bundle with the non-sports four, suggests that the latter could cost just $9 a month. That’s cheaper than anything I speculated about at the time, though only barely.)

It’s become increasingly apparent that the current batch of “skinny bundles” is more about the Big Nine declaring their independence from cable companies and networks not owned by the Big Nine (not to mention broadcast stations) than from the cable bundle itself, with all of them too scared of the consequences of leaving the others. In that sense, there is some importance to a Hulu skinny bundle that gives Disney and Fox a distribution mechanism independent not only of cable companies but of any middlemen whatsoever. But don’t be fooled by the uncritical pro-cord-cutting media touting it as some sort of landmark development in the breakup of the cable bundle. In the end, a Hulu skinny bundle will do little to benefit the consumer, at least in the short term, only its owners.

Why is the NCAA Basketball National Championship on TBS?

Tonight, Villanova and North Carolina will face off for the NCAA Men’s Basketball National Championship – but you won’t see it on CBS. For the first time ever, college basketball will crown its national champion on cable, with Jim Nantz, Bill Raftery, and Grant Hill calling the action on TBS (and slanted “team stream” coverage of each team on TNT and truTV). How did this happen? Why was the NCAA willing and able to take the smaller audience of cable? Well, I gave the short answer in my book, The Game to Show the Games:

By 2010 CBS wanted to get out from under a contract to air the NCAA Tournament that was set to lose it considerable amounts of money each year, to the point of engaging in talks to get ESPN to take it off its hands. Certainly the NCAA was very interested in moving most of the tournament to cable, which not only had the potential to increase the rights fees the NCAA collected but also allowed every game to be shown nationally, without the regionalization CBS had engaged in. CBS ended up retaining the tournament by forming an alliance with Turner to show games on TBS, TNT, and truTV in addition to the CBS broadcast network. Turner had never shown college basketball before and truTV, once known as Court TV, had never shown sports of any kind before, but Turner, which was paying a larger portion of the rights fee, went so far as to start alternating the Final Four with CBS starting in 2016 (later negotiations allowed TBS to show the national semifinals in 2014 and 2015 while the national championship game remained on CBS).

The long answer? You’ll have to get the book for that, and for how television money has completely upended the world of sports over the last decade, especially since the BCS blazed this trail with its 2008 agreement with ESPN, how the race for sports rights has changed the TV industry in turn, and how it might all prove to be built on a house of cards that might already be tumbling down. For this week only, until Friday, April 8th, you can get it for Kindle absolutely FREE, or you can buy the paperback at most online booksellers anytime. By the time you’re done reading, you might wish you hadn’t watched the game at all.

Breaking down the new Thursday Night Football deal

Earlier this month the NFL announced a two-year deal with CBS and NBC to split the Thursday Night Football package, pocketing a cool $900 million in the process. CBS will have some games in the early part of the season, with NBC having the later part and NFL Network having some exclusives sprinkled between both parts. The NFL also still wants to sell the TNF package to an over-the-top outlet.

That’s a huge chunk of change, and it’s easy to look at that price and go “what sports rights bubble?” Certainly it looks like CBS and NBC don’t agree with Rich Greenfield that the massive amounts ESPN has paid for sports rights are rooted in assumptions that no longer hold and will end up undermining it, at least within the next two years. As I explain in the book, cord-cutting should actually make sports rights even more valuable, and in fact the forces driving it have arguably been underlying the sports rights boom all along, as one of the few pieces of content guaranteed to keep people watching linear television and keep them signed up for cable. If you look at this deal, you’re thinking it’s a good sign for the Big Ten’s ability to collect a hefty chunk of change from ESPN and Fox (not coincidentally two of the three outfits that didn’t get in on this deal).

That said, I do have to wonder if this is actually that great a deal for CBS and NBC. Analysts at Barclays looked at ad sales vs. rights fees and concluded that CBS lost money on Thursday Night Football last year, though they expect CBS to come out slightly ahead this year with the lower game load; throwing in production costs, Morgan Stanley thinks CBS lost $200 million on the deal and both networks could lose over $100 million a year under the new deal. Of course, ad sales aren’t the only benefit CBS gets from TNF; more NFL games increases the retransmission-consent value of CBS stations, high-rated NFL games increase the lead-in for local news, and CBS gets to use TNF as a platform to promote its other shows. On top of that, under normal circumstances networks do, in fact, make money off ads alone from NFL games. But CBS had to share its Thursday night package with NFL Network, meaning it likely had to share ad revenue with NFLN as well, and might have to share it with whatever OTT partner the NFL gets on board. That also means that, in theory, any retrans benefit from TNF games would be limited if cable operators could still pick them up off NFL Network, though I wouldn’t be surprised if the NFL would require cable operators to pick up CBS to get TNF games on NFL Network.

But selling games to an OTT partner could cripple the amount of money all three networks can get off TNF games from cable operators, even the NFLN-“exclusive” games their deals with cable operators require them to keep. The best-case scenario is that games are sold to Verizon or AT&T under similar terms as Verizon’s existing smartphone deal, where you have to sign up to their existing services to watch the games, meaning subscribers to rival carriers would have to watch on one of the linear networks. The next-best case is if the games are sold to a subscription service, meaning if you aren’t signed up for that service already there’s value in finding a service that carries one of the linear networks or getting an antenna, but by all accounts that’s unlikely. Where there could be a real problem is if the games are sold to an outfit like Yahoo under similar terms as their London game last year, where the stream is free to everyone. Besides making it more likely that Yahoo would want a cut of ad revenue, that means TNF games provide little to no incentive for cable operators to pay more for CBS, NBC, or NFL Network than they otherwise would, with the main incentive to want any of the networks being to avoid seeing Tweets that are as much as a minute ahead of the online stream. It also means some of the suggestions I’ve seen, where the cockamamie scheme where some games air on CBS, some NBC, and some NFL Network leads people to just watch all the games on NFLN, might instead lead people to watch it on the OTT outlet, limiting the amount that any of the networks benefit from the games.

If I’m CBS I’m not sure I agree to this deal without at least securing rights to the games for CBS All Access (and with NBC getting the second half of the season I’d want to find out how much to pay them to get the rights to the season-opening kickoff game, reducing the perception that the balance of Thursday games is tilted towards NBC with that and the Thanksgiving game); if I’m NBC I think long and hard about becoming a party to a scheme that could accelerate the growth of streaming video, potentially at the expense of my parent Comcast’s cable business. I certainly don’t think five games apiece, plus producing four more for NFL Network, with all the games airing on NFLN and an OTT outlet, is worth anything near what CBS and NBC are paying for them.

The NFL is talking about still having an opportunity to “grow the profile” of the Thursday night package, but if the NFL has to come up with this confusing scheme to split the games between two different broadcast networks and sell them to an over-the-top outlet, I think they’re bumping up against the limit of how much value the Thursday night games actually have, and I think this probably puts the nail in the coffin for the notion that the NFL will eventually sell part of the Thursday night package to a cable network like FS1 or NBCSN. The NFL is running up against the inherent limits of the Thursday night timeslot, the questionable quality of the games played on short rest and the need to give every team exactly one game played on short rest, meaning you inevitably have to put the Titans and Jaguars on at some point and you’re limited in how much you can showcase the marquee teams. NBC is salivating over the late-season games they get to show, but the lack of flexible scheduling means they could easily get shafted with dog games involving dog teams; at least early in the season you can put on name teams and people will watch before they know just how good or bad they actually are. (Of course, expect NBC to get the Cowboys the week after Thanksgiving every year, which is guaranteed to pop a rating no matter how much they or their opponents suck.)

Honestly, I wouldn’t be surprised if Thursday Night Football doesn’t last beyond the end of the current long-term deals in 2022. If selling it to a cable sports network is a dead letter – and Fox, NBC, and ESPN are all likely going to be badly hurting from their hefty investments in their cable sports networks by then – and there isn’t the oversupply of linear TV space there is now, then given the constraints on the product TNF really only makes sense as long as the NFL still has its own cable network, and while you’d think if any outfit could justify its own network, even in a future age of linear television contraction and a la carte, it would be the NFL, the limited live game inventory it would have would make it a tough proposition (something that’s not necessarily the case with college conferences like the Big Ten or SEC), especially given the pros and cons of continuing to sell some of it to another outlet. Depending on how viable an option ESPN is looking, I could see the NFL trying to monetize Monday Night Football in much the way they’ve been doing with Thursday nights, where they can offer more consistent, better matchups and better quality of play than what they can offer the networks and over-the-top outlets that have been bidding on TNF. It’s doubtful they can get the kind of money ESPN pays them for MNF, but then it’s doubtful ESPN itself will be able to pay that much by then.

The realities of trying to turn Thursday Night Football into an institution on par with MNF and SNF are coming home to roost, and while CBS, NBC, and an over-the-top outlet to be named later may be allowing the NFL to keep deluding itself otherwise for now, it may be about to bite all of them in the ass.