Even then it's unlikely to offset its full investment through advertising alone, which would require it to quadruple the price of a 30-second spot. Instead, for the deal to make sense, the network must also rely on having two Super Bowls in the next six years-when the average price of a commercial on the broadcast will likely soar to $3 million and beyond-as well as leverage the NFL as a promotional platform to increase viewers and ad rates on its other shows.
Still, the machinations underscore the precarious position NBC has put itself in with its underperforming prime-time lineup.
Marketers who paid $150,000 per spot on ESPN last year will be looking at more than $300,000 for a 30-second spot when NBC takes over the package next year. ESPN made just over $108 million on advertising last year for "Sunday Night Football," according to TNS Media Intelligence, charging about $150,000 per 30-second spot, with an average of 43 commercials for each of its 17 telecasts.
Because it is a broadcast network, NBC's new Sunday night package will likely be priced more in line with ABC's "Monday Night Football." ABC, which made $330 million in ads in 2004 on the broadcast, charged advertisers about $325,000 per spot with an average of 60 commercials for its 17 games. And ABC said it still lost about $150 million on "Monday Night Football."
One chief marketing officer, whose sports brand advertises on NFL telecasts isn't surprised the Sunday cost would double. "You have to expect that with the shift to broadcast," he said. "But ... while NBC might be able to justify an increase, I can't see how ESPN is going to portray it."
Ray Warren, managing director of Omnicom Group's OMD USA, agreed. "They don't get an automatic up [in ad rates] just because it's `Monday Night Football,' " he said.
The NBC broadcast package is worth $3.6 billion, or $600 million a year for six years, while the ESPN cable deal for "Monday Night Football" is valued at $8.8 billion over eight years.
The NFL package should help NBC regain its declining viewership in the 18-to-49 demographic, something NBC Universal TV Networks Group President Randy Falco admitted "had an impact on our decision-making" to pursue the rights.
On a conference call April 18, NBC Universal Chairman Bob Wright said, "This is going to be a profitable transaction." Responding to question about whether it could be profitable on ad revenue alone, he said, "Yes."
"There's something to be said for being aligned with the NFL," said Andy Donchin, director of national broadcast for Carat.
Yet however desperate the move may have been, experts and analysts agree it was a steal. For its $600 million the network is getting 17 NFL telecasts on the most-watched night of TV; the special Thursday night season opener; a playoff doubleheader on the first weekend of the postseason; two Pro Bowls; and two Super Bowls in 2009 and 2012.
contributing: abbey klaassen