NFL is ‘frenemy’ to its TV partners, analyst says

Is the National Football League biting the hands that feed it?

That’s the view of Sanford C. Bernstein media analyst Todd Juenger who, in a report released Monday, called the the NFL a “frenemy” to the broadcast networks and ESPN.

Every Sunday millions of viewers flock to CBS, Fox, NBC and ESPN to watch football games. That’s good.

But every Thursday, millions flock to the NFL Network to watch games and that is taking away viewers and advertisers from the league’s partners. That’s bad.

Of course, one of the reasons the NFL launched the NFL Network was to create its own platform for games and other football-related content. The channel not only allows the NFL to promote its own brand, it also gives it a bit of leverage in negotiating with other networks who want to carry its games.

Thanks to new deals with Time Warner Cable and Cablevision, the NFL Network is now in more than 70 million homes. This season, it is carrying 13 Thursday night games. Last season it only had seven games.

The moves have paid off for the NFL Network. Its audience has grown and even though it is still not as widely distributed as a typical broadcast channel, its Thursday games have on occasion gotten more viewers than NBC’s Thursday lineup. Thursday is one of the most important nights for the television industry because advertisers, particularly movie studios and car companies, like to spend heavily there in advance of the weekend.

While the NFL’s strategy is paying off for itself, Juenger thinks it is hurting the big four broadcast networks. Prime time ratings for the broadcast networks are down about 8% in the key adults 18-49 demographic. Juenger attributes 25% of that drop to the NFL Network’s Thursday games, which are averaging about 6 million viewers.

“As a percentage of total viewers, the NFL Network has average 7% share across both cable and broadcast on Thursday nights. “Those 6 million viewers, and 7% audience share, had to come from somewhere,” noted Juenger.

As for advertising, Juenger estimates that the NFL network gets about $20 million in commercial dollars per game or $140 million for its whole season. Given that football’s audience is primarily men, the network most likely feeling the sting is ESPN.

“The NFL Network effectively added a significant supply of available advertising
impressions against the same target audience, in the same programming environment, as ESPN (as well as NBC’s Sunday Night Football),” Juenger said. “Unless advertiser demand for impressions delivered against a ‘football audience’ increased proportionately, revenue for ESPN will decrease.”

The NFL gets about $6 billion a year in rights fees from its TV partners. As long as the NFL is delivering big audiences on Sunday and Monday, the odds of CBS, NBC, Fox or ESPN making noise about Thursday Night Football are pretty long.

The NFL Network does not have a long-term agreement with the league for the Thursday night package. In other words, the package could be sold to another cable channel such as the NBC Sports Network or the sports channel Fox is planning to launch next year.

In other words, Thursday night football isn’t going away regardless of who’s carrying it.

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NFL RedZone keeps its eye on the games

NFL finally reaches deal with Time Warner Cable

Follow Joe Flint on Twitter @JBFlint.