HOW FOX DEAL AIDS NFL GLOBAL AIM

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The National Football League has already tackled America. Now, with the help of new partner Rupert Murdoch and other global TV players, its sights are set on the rest of the world as never before.

Shortly after NBC's Jan. 30 telecast of Super Bowl XXVIII, the NFL plans to unveil a new global marketing plan designed to accelerate the sport's expansion overseas, Advertising Age has learned.

It was the Fox network that stunned the sports industry last month when it snatched the TV rights to National Football Conference games and the 1997 Super Bowl from CBS by agreeing to pay $1.6 billion over four years, thus eliminating CBS as an NFL player.

While the recently concluded U.S. TV rights deals did not include international elements, NFL network executives said they are competing vigorously for the right to partner with the NFL in its global expansion. In addition to Fox, Capital Cities/ABC, NBC and Turner Broadcasting System are partners with the league in various broadcast deals.

"Between Star and Sky [Mr. Murdoch's TV networks in Hong Kong and the U.K., respectively] where we are going to have dedicated sports channels, it certainly looks like one of the strategic reasons for doing this deal is to get into business with people you want to be in further business with," a senior Fox executive said, referring to Murdoch-owned overseas satellite networks.

But Fox has company in the NFL global media chase.

"We're all a part of that," said a senior Turner executive. "There's no reason why Rupert moved in and took it over. When you're partners with someone, you can talk to them daily. We're all interested in conducting that partnership."

Currently, the league has deals with Turner to distribute NFL coverage to the former Eastern bloc countries and with Cap Cities' ESPN International for the rest of the world except for Western Europe and Japan, where the NFL distributes.

"On our side, I have some hopes that in the months ahead we will come up with a few [international] things," said Dick Ebersol, president of NBC Sports.

NBC executives are bidding aggressively on European and Latin American NFL TV rights. NBC recently took control of Super Channel, Europe's biggest satellite TV service, and has launched Canal de Noticas, a 24-hour cable network in Latin America, plus ANBC, an all-news channel in Asia.

Cap Cities also has a stake in Eurosport as well as several European TV channels.

Although the NFL's global plan is still being formalized, several details are set, including:

Expansion of NFL TV rights deals worldwide.

The relaunch of the World League of American Football in the spring of 1995, this time primarily in Europe.

Establishing American Bowl games, pre-season NFL games featuring U.S. teams playing in markets outside the U.S.

Creation of a new entity called NFL International, a unit that would oversee World League marketing and international licensing of NFL Properties.

"It's an integrated plan that's still developing," said Dick Maxwell, NFL director of broadcasting services. "But it is a steadily growing market for us because of deregulation and more commercial channels opening up throughout the world."

Mr. Maxwell said the linchpin of the new global marketing plan will be the development of the World League, which ran for two years but was mothballed after its lackluster 1992 spring season.

ABC, which carried the 1991 and 1992 World League games, averaged well below a 2 rating for the Sunday afternoon schedule, far below the network's normal week36

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end sports ratings average. And its telecast of the World Bowl championship game in 1991 earned only a 2.1 rating.

Nonetheless, NFL team owners last fall voted on the reintroduction of the World League as a means of promoting American football overseas. However, the plan calls for the league to be based primarily in Europe, with teams in such cities as London, Barcelona and Frankfurt. The NFL does not plan to have any U.S. teams in the World League, though it may be exported to other continents. In its last incarnation, the World League had six U.S. franchises: New Jersey; Ohio; Birmingham, Ala.; San Antonio; Orlando; and Sacramento, Calif.

While the league initially performed poorly in the U.S., the NFL's Mr. Maxwell said it did well in Europe, averaging stadium attendance between "25,000 and 30,000" people.

A European World League TV deal is expected to be part of the NFL's new global media plan. Turner, Mr. Murdoch's News Corp., ABC and NBC are all said to be interested in the European coverage.

"There's growing interest," Mr. Maxwell said. "We'll be able to finalize our plan after the Super Bowl, but frankly, the U.S. TV deals took precedence."

Indeed, but those deals have structured some ideal relationships for the NFL to export football globally. News Corp. seems well suited for the task.

Recently, Mr. Murdoch established Fox Sports, a unit of Fox, that will oversee development and production of NFL games on Fox in the U.S., as well as other sports programming. David Hill, a veteran News Corp. executive, has been named president of the unit.

"News Corp. obviously provides more opportunities and options down the road, but you have to remember that NBC has the Super Channel in Europe and Capital Cities/ABC owns part of Eurosport," said Mr. Maxwell "A lot of our domestic U.S. carriers have significant international interests."

U.S. media executives have been trying to assess the impact Fox's coverage of the NFC games will have on the U.S. game.

While some have projected NFC ratings could suffer as much as 15% due to the shift from CBS to Fox, executives for Fox, the NFL and some agencies believe Fox has a reasonable shot at maintaining CBS's current average 13 rating for regular-season coverage.

"I don't think the ratings are going to go down a much as some other people think," said Steve Sternberg, senior VP-broadcast research of BJK&E Media, New York. "I'm looking at the NFL on Fox the way some people look at kids [programming] on Fox. And look at what Fox is doing in the kids market. The point is that kids know what's on and they watch the programming. I think the same thing will happen with football. If somebody in New York wants to watch the Giants game, they won't care if it's on Channel 2 or Channel 5. They'll just turn the channel."

Fox executives estimate they will about match the CBS rating, sell their ad inventory for about the same prices and, over time, will likely increase those rates because the economy and the TV sports marketplace are improving.

But even at CBS' performance level, the NFC coverage will be a terrific boon to Fox. Besides generating about $250 million annually in network ad revenue, football will more than double Fox's supply of gross rating points during the fourth quarter, a key time for new show launches.

Fox will also likely generate about $25 million a year from NFL-related programming and earn more than $60 million in ad sales from 1997 coverage of Super Bowl XXXI. Further, the eight Fox-owned stations will benefit from local NFL ad deals.

Indeed, while Fox's mammoth $395 million annual NFL rights fee is unlikely ever to post a profit on a network ad sales basis, the network's executives believe intangible values of promotion-increased coverage, the impact it will have on the asset value of the Fox-owned TV stations (increasing their value as much as 15% annually during the course of the four-year deal) and enhancing other company values-will more than make up for the investment.

"Just consider what the NFL did to the asset value of ESPN and Turner and you will see the potential it has for Fox," said a Turner executive. "It will strengthen their distribution and their lineup and it will help them develop and promote new prime-time TV shows. And with financial interest and syndication rules being eliminated, it allows Murdoch to develop a few more shows like `Married .|.|. With Children' that can be sold into syndication, which will more than make up for what he loses on the [games]. Any way you look at it, he wins."

As for CBS, observers believe the network made the prudent choice because, unlike Fox, it cannot amortize NFL game losses against the ripe values that now reside with Fox. Said Len DeLucia, VP-program planning of CBS Sports: "In the short term, we will expand what we already hold, which would be college basketball, golf and auto racing. But in the long term, we would pursue college football playoff package, when and if it becomes available."M

Jeff Jensen contributed to this story.

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