Fox Back in the Big Picture

The NFL reached an eight-year deal with Fox--at a price of $2.75 billion for the first five years--on Monday and moved closer to finalizing a new TV package that could be bigger than all nine of its previous contracts combined.

The NFL is looking to replace its four-year, $4.4-billion contract with Fox, NBC, ABC, ESPN and TNT that expires next month.

Industry insiders predict at least a 70% increase in rights fees, which would bring the NFL about $1.87 billion annually for a total package of nearly $15 billion.

Commissioner Paul Tagliabue announced the Fox deal and league spokesman Joe Browne said the commissioner’s goal was to complete the other contracts by the end of the week.

Fox was awarded a package that allows it to continue televising NFC games on Sunday afternoons. The network will also show three Super Bowls, including two in the first five years of its deal, starting with the game on Jan. 31, 1999, at Miami.

According to a source familiar with the negotiations, Fox will pay $550 million for each of the first five seasons. The NFL holds the option to reopen the Fox contract after those five years, before the 2003 season.

If the contract remains in effect, an escalator clause will take affect and raise the price by an amount to be determined for the final three years.

“This reopening option would enable the NFL clubs to benefit from future positive changes,” Tagliabue said.

The remainder of the deal could be announced as soon as Wednesday if the incumbents meet the NFL’s price.

“With ratings eroding, you have to have blue-ribbon sports franchises because they can assure a big audience, big advertising price and big revenue,” said Ron Frederickof the J. Walter Thompson advertising agency. “But it is not a lead-pipe cinch that everybody will kill themselves to get the NFL.”

Under the previous deal, Fox paid $1.58 billion over four years, ABC paid $920 million, NBC paid $868 million, ESPN paid $524 million and TNT paid $496 million.

Fox, which outbid CBS by $100 million a year in 1993, and ESPN and TNT, which have little viable competition, appear safe. But that is not the case for ABC and NBC, which have CBS ready to make a deal.

Fortified by the NBA’s recent four-year, $2.6-billion agreement, NFL owners expected a big revenue boost of their own, despite the fact that the NFL generated its worst combined television rating since before the 1970 AFL-NFL merger. ABC’s rating was off 7%and NBC, Fox and ESPN were all 5% lower. Only TNT showed an increase, jumping 6% for its Sunday night package.

But the NFL is still the best way for advertisers to target young males--and the league, networks and advertisers all know it.

More than one quarter--$3.7 billion--of the $14.5 billion in ad sales generated by the four major networks in 1996 was generated by sports events, said Brian Schecter, an analyst with Paul Kagan & Associates Media Sports Business. Of that total, 40 percent came from the NFL.

“There is too much focus put on ratings, because they are so easy to look at,” Schecter said. “But ratings comparisons miss the point because the landscape has changed so much. You need to look at ad revenues, how many affiliates sign up and other benefits networks get from football.”

This will be the 10th contract awarded by the NFL since 1962, when the league and CBS agreed on a two-year regular-season deal for $4.65 million, about the price of four 30-second commercials during the Super Bowl. If the league gets a 70% increase, a new eight-year deal--which would be worth about $15 billion--would cost slightly more than the previous nine combined, which totaled $14.89 billion over 36 years.

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* T.J. SIMERS: San Francisco 49ers are showing their class. C7