THE GENERAL ELECTRIC CO.-OWNED broadcast network has given up on the National Football League, Major League Baseball and most recently the National Basketball Association, but its new pact with the Arena Football League will avoid the expensive risks of conventional TV rights deals. NBC's revenue-sharing arrangement with the AFL could represent the deal of the future, especially in light of growing financial losses related to sports programming, executives say.
THE NETWORK PAID NOTHING upfront for domestic rights to broadcast the 16-team league's season starting in 2003, says Ken Schanzer, president of NBC Sports. Instead, after NBC covers production, clearance and promotional costs, about a third of the remaining advertising and sponsorship revenue will go to the AFL. The rest will be split 50-50, Mr. Schanzer says. After the first two years, NBC can exercise exclusive four-year options on the same terms-in perpetuity, he says.
TEAMS CAN negotiate rights with local stations to carry their games as long as those broadcasts don't conflict with NBC's nationally televised Sunday afternoon games. Walt Disney Co.'s ESPN formerly telecast AFL games, and sibling ABC broadcast the league championship.
FINALLY, NBC will get a percentage of the increased value of the franchises when they're sold, Mr. Schanzer says.
NBC IS HOPING for greater success on the gridiron following its dismal outing last year with World Wrestling Entertainment's XFL, which failed to survive past its inaugural season. The results remain to be seen, says David Tice, VP-client service with Knowledge Networks/SRI , a Westfield, N.J., media research company. Mr. Tice doesn't "think anybody's expecting [NBC] to hit a home run with it or even a triple or a double."
TO ACCOMMODATE Nascar coverage on NBC and fan interest, and provide an indoor, cold-weather pastime, the AFL changed its schedule from April through August to February through June, says Glenn Horine, exec VP-business development with the AFL. "It's a big deal for us, our sponsors, our teams. We are going to be a known commodity and product next year with critical mass," he says. "Though we've been around for 16 years, year 17 will be the first year for a lot of people."