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TV networks going far down the financial field with the NFL

NFL
NBC will pay more than $800 million this year for its “Sunday Night Football” pact. In this photo, Seattle Seahawks cornerback Richard Sherman (25) begins pass coverage against the Green Bay Packers.
(Stephen Brashear / AP)

Television networks this season are writing even bigger checks to the National Football League.

Professional football remains one of the most potent weapons in TV networks’ arsenals, drawing tens of millions of ardent fans who watch the sport live — making the commercial time more valuable to advertisers. And there is a new wild card this fall with the introduction of “Thursday Night Football” on CBS.

“Because of Thursday night we’re going to have more live programming ... and that’s going to help us quite a bit,” CBS Chief Executive Leslie Moonves told Wall Street analysts recently.

The NFL football season kicked off this week in muscular form. Nearly 27 million viewers tuned in NBC to see the Super Bowl champion Seattle Seahawks defeat the Green Bay Packers on Thursday, a 7% increase in audience over the 2013 season opener.

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CBS is doubling down on NFL football to solidify its position as the nation’s most-watched network. But its new deal for Thursday night games, which begins next week, didn’t come cheap.

The network agreed to pay about $275 million for rights to eight night games this fall — seven on Thursdays and one game on a Saturday night in December. In the booth for CBS will be the veteran announcing team of Jim Nantz and Phil Simms.

CBS also is paying the NFL more than $800 million a year for its package of Sunday afternoon games, bringing its total obligation to the NFL to $1.1 billion.

Overall, CBS, Fox, NBC, ESPN and DirecTV are paying the NFL more than $5.5 billion for TV rights deals this year. That’s a 22% increase over last year, media analyst Michael Nathanson of the MoffettNathanson research firm wrote in a report Friday.

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New NFL football agreements, negotiated three years ago and, kick in this season and are substantially higher than the last round of contracts.

ESPN pays the most: nearly $1.7 billion for its 17 Monday night games — a 24% increase over last year, Nathanson said. ESPN’s package also includes game highlights and digital rights.

Fox will pay more than $925 million for its Sunday package of NFC games. The network pays about 15% more than CBS does for its Sunday AFC games because NFC teams are located in some of the largest TV markets, including New York, Philadelphia and San Francisco. Fees increase over the nine-year life of the contract, and Fox ultimately will pay more than $1 billion a year.

DirecTV pays the NFL a little more than $1 billion for its “Sunday Ticket” package. This is the final year of that deal, but the satellite broadcaster is expected to reach an agreement to extend its rights for future years, according to a person close to the company.

NBC will pay more than $800 million this year for its “Sunday Night Football” pact, Nathanson said. The NFL fees eventually will escalate to about $950 million a year.

CBS’ investment for Thursday games looks to be a solid bet, even if the advertising revenue generated doesn’t fully cover the TV rights fee and the costs of production.

The network is charging about $600,000 for each 30-second spot during the game at a premium rate for network television.

Still, that amount is about 14% less than what NBC commands for a spot on “Sunday Night Football.” The Sunday franchise is an established juggernaut, which boasts some of the most competitive match-ups. Also, more people are at home watching TV on Sunday nights than on Thursdays.

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“Overall the deal could be profitable, assuming CBS gets the ratings it is guaranteeing,” Barclays Capital research analyst Kannan Venkateshwar wrote in a Thursday report.

Not only should the eight games give CBS a big boost in the ratings, the popularity of the sport could hobble CBS’ competitors, namely Fox and NBC, on Thursday nights.

Thursday night has long been the most profitable night of the week for the broadcast networks because movie studios, car companies and retail giants pay a premium for commercials to try to influence weekend spending.

“‘Thursday Night Football’ could help CBS in other ways,” Venkateshwar wrote, noting that CBS plans to relocate its most popular comedy, “The Big Bang Theory,” to Monday from Thursday to make room for football.

That means Monday on CBS should be more profitable because the network charges more than $300,000 for a 30-second spot on the sitcom and that “could help CBS not just capture more dollars on one of the more important nights a week ... but could also help boost the company’s Monday lineup, which has been weak of late,” Venkateshwar wrote.

Having Thursday night games will be a boon for local TV stations owned by CBS as well as its affiliates. The package also should help CBS command higher retransmission fees from pay-TV distributors to carry the CBS station signals.

As part of the deal, the CBS games will be simulcast on the NFL Network, the channel owned by the league. CBS also agreed to produce eight additional Thursday games for the NFL Network later in the season.

The network is hoping to extend its Thursday night football package beyond this year.

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The current arrangement with the NFL covers two years, but the NFL has the right to terminate the contract after just one season, according to people familiar with the matter who were not authorized to speak publicly. If the deal is open to others next year, CBS will probably face stiff competition from Fox and NBC, which also are hungry for weeknight games.


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