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With $100B NFL Deal, TV Networks Keep One Foot In the Bundle and Another in Streaming

by Alex Weprin | HollywoodReporter.Com

Troy Warren #business-all

 

The league is giving linear networks a decade to manage a digital transition as the pay-TV bundle inevitably declines.

The National Football League’s eye-watering 11-year, $100 billion media rights deals will have repercussions for the media and entertainment industry for years to come — but it may not hasten the end of linear TV as its currently set up.

For the legacy entertainment companies that signed on: Disney, NBCUniversal, ViacomCBS and Fox; the deal is both a long-term commitment to the declining pay-TV bundle, and a bet on a future where viewers stream their sports, most likely through a direct-to-consumer offering.

So while some analysts, like LightShed’s Rich Greenfield, argue that the deal marks “the day the multichannel TV bundle died,” and others like The New York Times’ Kevin Draper write that they “are fundamentally broadcast/cable television deals,” the agreement actually walks a fine line, with the companies keeping one foot firmly planted in pay-TV, while dipping the other toe in the streaming waters to feel things out.

It’s a point of view shared, in fact, by the NFL.

“I don’t think it’s an either-or approach for us,” the evp and COO of NFL Media Hans Schroeder told reporters on a conference call Thursday evening, when asked about balancing streaming and linear. “I think for us we look at it very much as how do we add distribution in a way that’s complementary and that is reaching fans through new screens and new opportunities and is growing the opportunities they have to engage with our game.”

To be sure, many of the most exciting aspects of the new deals involve streaming. For example: Both NBCU’s Peacock and ESPN+ will get a limited number of exclusive games, with both services getting simulcast rights to games from NBC and ESPN, respectively. Paramount+ will simulcast games from CBS, while Fox gets the rights to streams games on its own streaming platform … if it ever decides to launch one. Even the free ad-supported services Tubi (Fox) and Pluto (ViacomCBS) get some added NFL rights.

However, as Fox Sports evp Michael Mulvihill notes: “94% of NFL game inventory in the new deals stays on linear TV. The NFL became king in media by limiting supply and valuing reach and that doesn’t change much.”

“While digital is growing, the traditional TV ecosystem is still incredibly rich, incredibly deep, incredibly broad. We reach over 200 million people a year through television,” Schroeder said. “We’re certainly excited about the opportunity that Disney is going to have to grow new platforms with our content [Schroeder made the comments on a call hosted by Disney], but the existing and traditional ones are still really big, even if they’re not growing like they once were, and there’s still a ton of our fans that we know look there first to get our games and our content.”

In other words, the NFL knows where its bread is buttered, but it wants to make sure it will be relevant in a world with a much smaller TV bundle. For the networks, it gives them a decade to manage that transition as the bundle inevitably declines.

In the streaming world, everything is flipped. Where the networks have enormous reach through broadcast and cable, in streaming, Amazon is king.

Amazon has over 100 million U.S. subscribers to Amazon Prime, all of whom will have access to Thursday Night Football. That’s more than the entire traditional pay-TV ecosystem, which is now made up of approximately 82 million households, according to nScreenMedia. It is also more paying subscribers than Paramount+, ESPN+ and Peacock have put together.

“In the very long-term, we continue to see technology as expanding the pie not shrinking it,” wrote Morgan Stanley’s Ben Swinburne in a report Friday. “This has been the case in prior cycles, from broadcast to cable, cable to satellite, and now to Internet TV. By the end of these agreements in 2033, all we know for sure is the landscape will look dramatically different than it looks today.”

The NFL hopes, however, that one thing will remain constant: “The bottom line in TV is that if you have the NFL, you’re relevant,” Mulvihill tweeted after the deals were announced. “And if you don’t, you’re competing to be the least irrelevant.”