What a new collective bargaining agreement means for NFL fans: Sports Media Brief
Welcome to the latest edition of Ad Age Sports Media Brief, a weekly roundup of news from every zone of the sports media spray chart, including the latest on broadcast/cable/streaming, sponsorships, endorsements, gambling and tech.
The NFL’s meathooks have been sunk so deeply into the American imagination (and our wallets) that the league still owns the news cycle even as it begins settling in for its ostensible off-season break. Such is the case this week, as ESPN’s Adam Schefter reports “there is now mounting optimism” that a new collective bargaining agreement could be finalized “sometime in the next week.”
Unlike the last CBA deal, which was hashed out under the cloud of a lockout that threatened to disrupt the 2011 NFL season, this year’s negotiations will be held during a time of relative peace and stability. The speedy adoption of a new CBA is expected to fast-track a few major alterations to the NFL schedule, while also allowing the league to turn its attention to the upcoming media-rights auction (more on that in a bit).
As Schefter reports, the terms of the new CBA would expand the playoff field from 12 to 14 teams, while an extra week would be added to the regular-season slate, increasing the workload to 17 games per team. (While this arrangement would seem to bring us one step closer to the dream of pushing the Super Bowl up two weeks, thereby scheduling the Big Game the day before President’s Day—no more ruinously hungover post-game Mondays!—apparently that’s not in the cards. We can but dream.)
Schefter’s sources tell him that the expanded playoff field is already a go, as “that’s been agreed to for a long time.” Look for the 14-team playoff structure to kick in at the end of the 2020 season. Adding an extra game to the regular-season slate, however, may prove to be a far stickier wicket. Even if the players approve of the measure, the bonus round wouldn’t officially take effect “until 2021 at the earliest.” The owners are hoping a little green will help grease the wheels; Schefter reports that under the new CBA, players would go from a 47 percent revenue share to a 48.5 percent cut if they sign off on the 17-game load, a move that would push an additional $5 billion to the players’ side of the table.
Other incentives in the proposed CBA include a revamped drug policy, 25 percent higher minimum salaries and relaxed offseason and training-camp work rules. The owners on Thursday afternoon ratified the terms of a new CBA in Manhattan, while the players’ union reps will discuss the proposal later today during a conference call. If two-thirds of the player reps sign off on the offer, the matter will be put to a vote. If a majority of the NFL’s 1,900 players vote to ratify the measure, a new CBA will go into effect immediately.
The owners hope to finalize a deal before the NFL calendar year rolls over on March 18.
Once a deal comes together (and, for what it’s worth, here’s one guy who isn’t a big fan), the NFL will be clear to begin negotiating its new round of rights packages. Given the outsized impact pro football has on the media ecosystem, the networks can expect to pay on the order of a 50 percent rate increase—or far more. In one scenario mapped out by MoffettNathanson analysts, the going rates for the NFL’s Sunday afternoon and primetime packages could soar 80 percent, which would value a “Monday Night Football” deal at $3.42 billion per year, or nearly twice the price of a season of “Sunday Night Football” ($1.73 billion).
ESPN currently forks over a princely $1.9 billion per year for its “MNF” pact, which includes all sorts of sidecar rights to game highlights and other shoulder programming. ESPN has reportedly informed the NFL that it plans to shift the Monday night telecast back to ABC if it retains the rights to the primetime package. Such a scenario would likely involve some sort of “MNF” simulcast on ESPN, which depends on the NFL not only as a source of ratings points but as the property that buttresses its staggering affiliate fees.
While much speculation seems to favor a disruption from one of the members of the deep-pocketed FAANG set, the NFL’s enthusiasm for broadcast TV is not at all ambiguous. Linear TV will remain the primary delivery system for football through the end of the new rights deal, and but for the ABC/ESPN intrigue, most, if not all, of the current packages will remain in place.
As we await a new CBA, it’s perhaps best to ignore the hooting from the rowdier precincts of the media peanut gallery. For example, while LightShed Partner and media analyst Rich Greenfield has chirped a grim forecast for CBS, opining that the network will lose its Sunday afternoon slate to NBC or ABC, that’s simply not going to happen—especially not when CBS has decided to punt away its megabucks SEC deal. When the NFL is demonstrably the only thing keeping the lights on, the right to air its games is a utility bill that gets paid as soon as it drops through the mail slot.
Sports: it’s what’s for dinner
The erosion of the ratings for non-sports programming is one of the factors that helped CBS and Turner Sports sell out their shared March Madness inventory in record time. According to Nielsen live-same-day data, the average rating for a scripted broadcast series is currently a smidge over a 0.7, which translates to fewer than 950,000 adults 18-49.
Take your pick from the police lineup of usual suspects: There’s cord-cutting (only 75.3 percent of U.S. TV homes still subscribe to a traditional multichannel bundle), the dizzying specter of choice (Nielsen says there were 646,152 unique program titles to choose from across linear and streaming services in 2019) and, to be perfectly frank, a spate of lousy development. Of the season’s 20 lowest-rated broadcast shows, 12 are newcomers. How any of these misfits was ever green-lit, let alone televised, is a mystery on par with those giant stupid heads on Easter Island or the baffling popularity of Logan Paul.
Things become even more disconcerting when you take a look under the hood at the currency data. Total-day broadcast C3 deliveries fell another 10 percent in 2019, as the over-the-air networks averaged 2.99 million commercial impressions among the 18-49 crowd. The Big Four saw primetime commercial deliveries drop 8 percent in the fourth quarter, and in the course of the last three years, nearly one-third (32 percent) of the guaranteed impressions have vanished into thin air. And the declines at the ad-supported cable networks are even more vertiginous.
In the fall quarter, when Americans watch more TV (and spend more money) than they do any other time of year, CBS averaged 985,000 adults 18-49 in C3, down 24 percent compared to the year-ago period. ABC dropped 11 percent to 1.09 million, while NBC was down 7 percent to 2.13 million. Only top-rated Fox (2.33 million) managed to eke out a year-over-year gain in C3 impressions, growing its share of commercial-watching adults 18-49 by 6 percent. As the networks were busy pumping out their new and returning shows, advertising impressions in the quarter averaged out to some 1.63 million adults 18-49 per night, good for a 1.3 C3 rating. Three years ago, the four nets averaged 2.4 million impressions in the dollar demo, or a 1.9 C3 rating.
At the risk of flogging an expired pony, live sports is effectively the last bastion for marketers looking to engage with a mass TV audience of relatively young (and affluent) consumers. While general-entertainment deliveries continue to take on water, last year’s NCAA Men’s Basketball Final scared up a 5.2 C3 rating, good for around 6.75 million members of the 18-49 club. And given that the cumulative reach of the 67 tournament broadcasts dwarfs anything this side of the NBA playoffs, it’s a wonder March Madness didn’t sell out even faster.
Charles in charge
It’s been seven months since the regional sports networks formerly owned by Fox went dark for some 12 million Dish Network subscribers, but a deal with current owner Sinclair may be in the offing. Back in July, Dish Network Co-founder and Chairman Charlie Ergen warned investors, “It doesn’t look good that the regional sports will ever be on Dish again,” before noting that “Sinclair, we think, is a company we want to do business with.”
Ergen addressed the still-dark RSNs matter during Wednesday’s earnings call, reiterating his earlier position by saying that the math didn’t add up on a blockbuster carriage deal. “One of the big outliers is regional sports, in terms of the amount of money they charge and collect versus the amount of people who actually view them,” Ergen said during the Q&A portion of the Dish call. “We still have some people that might want to watch regional sports, but it’s a fraction of what it was” before the satellite company dropped the sports nets last summer.
As he did when the blackout was initiated, Ergen held out hope that a deal could be made with the new proprietors. “We would love to do a deal with regional sports; we really like Sinclair,” Ergen said. “It was an unfortunate circumstance that Sinclair did not own the RSNs when our contract was up.”
Ergen went on to say that intermediate RSN owner Disney had demanded far too much money from Dish to justify a renewal, saying that the offer “was not even close to something that made sense for us.” After declaring that Dish has had “a great relationship with Sinclair for a long period of time,” Ergen went on to close out the topic on yet another ambiguous note. “Whether you can put Humpty Dumpty back together again remains an open question,” he said.
As Sports Business Journal’s John Ourand points out, Dish’s carriage deal for Sinclair’s local broadcast channels ends in the first half of this year, a confluence of events which should “provide the impetus for Dish to finally do an RSN deal.”
It’s a tricky bit of business, balancing the demands of subscribers with the nosebleed rates associated with carrying live sports programming. “The industry-wide decline in video subscriptions will leave … ESPN and the RSNs with no alternative but to raise prices,” MoffettNathanson analyst Craig Moffett wrote Wednesday in a note to investors. “That, in turn, will make it less and less attractive for entertainment-oriented viewers to stay in the traditional eco-system; they will opt instead for non-live [over-the-top] alternatives. … [As a result] the linear pay TV universe will necessarily become more and more sports-oriented. Dish’s willingness to drop the RSNs (or at least to suffer what has now stretched into a long blackout) flies in the face of this narrative.”
Moffett notes that while the absence of the RSNs likely hurt Dish’s “otherwise relatively good subscriber results,” the cost savings “will clearly have helped EBITDA.” Dish last year lost 336,000 pay TV subscribers, compared to a drop of approximately 920,000 subs in 2018. (As Moffett suggests, it’s likely that Dish’s stability is a function of the “utter implosion at AT&T’s DirecTV unit,” which lost another 1.16 million subs during the final three months of 2019 and 4.1 million over the course of the calendar year.)
Ergen on Wednesday told Dish investors that a merger between his firm and rival DirecTV was “probably inevitable,” barring any regulatory tie-ups.
X marks the spot?
The second week of XFL action was met with the inevitable tide of audience churn, with viewership shrinking by a third. Per Nielsen live-same-day data, the weekend’s four-game slate averaged 2.05 million viewers and a 1.3 household rating, which marked a 34 percent drop in overall deliveries and a 32 percent decline in the ratings. (The first weekend of games averaged 3.12 million viewers and a 1.9 rating.)
While the XFL’s broadcast-heavy schedule makes for an apples-to-Fiona-Apple comparison with the bygone Alliance of American Football, which telecast the bulk of its games on NFL Network—the cable channel reaches around 62 percent of the homes that receive Fox and ABC signals—the Week 2 numbers are in line with early ratings guarantees.
If the XFL’s deliveries thus far have been perfectly respectable, it’s perhaps worth noting that the networks aren’t assuming much of the risk here. (For one thing, neither Fox nor Disney are on the hook for any rights fees.) If nothing else, the games aren’t exactly occupying the most coveted time slots on the grid; immediately after the conclusion of the league’s inaugural Seattle-Dallas broadcast on Feb. 8, our ABC affiliate cut to an infomercial, which in the vernacular of early fringe was “already in progress.”
That said, the XFL is far better-positioned to attract a larger audience than did the AAF, as 23 of its 40 regular-season games will air on old-school, high-reach broadcast TV. The remainder of the 2020 slate will be carried by ESPN and FS1, the two cable sports networks which boast the greatest number of subscribers.
While marketing investment in the first eight XFL games has been encouraging (commercial breaks have been loaded with the usual suspects from the fast-food, insurance and financial services categories), most automakers still seem to be steering clear of the new league. According to iSpot.tv data, the few in-game car ads that have popped up were sold by the Fox sales team; in addition to the three Volkswagen spots that aired during Fox’s opening weekend, Lexus bought three 30-second units in the network’s Tampa-Seattle broadcast (Feb. 15). Cable sibling FS1 on Sunday marked its first XFL telecast with 11 15-second Lexus ads that ran over the course of its coverage of St. Louis vs. Houston.
To date, the Disney nets have booked only one automotive unit, a 30-second BMW ad that aired during ABC’s New York-DC broadcast on Feb. 15. Given the general dearth of car ads in the ABC/ESPN’s XFL coverage, it’s likely that the BMW spot was a make-good unit.
Conspicuous by their absence in the XFL games thus far are some of the NFL’s top auto spenders: Hyundai, Ford, Chevrolet and Honda.
'If you happen to parlez français, you may or may not want to click over to this article about a French soccer player who was suspended for five years after he bit an opponent during a dust-up on the pitch. While decorum prohibits us from saying exactly what was chomped by the Gallic footballer, we can tell you that the wound required 12 stitches—zut alors!—and presumably no one in attendance will ever again order a plate of Saucissons a l'Ail.