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NFL TV Deal in Works
[FONT=times new roman,times,serif][FONT=times new roman,times,serif]By SAM SCHECHNER, MATT FUTTERMAN and MERISSA MARR
June 20, 2008 5:10 p.m.[/FONT]
[/FONT]
Walt Disney Co.'s ESPN cable sports network is in talks to form a partnership with the National Football League's NFL Network, according to people familiar with the situation.
Steven Bornstein, chief executive of the NFL Network and previously chairman of ESPN and president of Disney's ABC network, has been holding high-level discussions with Disney executives in recent weeks, according to several people familiar with the situation. Some team owners have been briefed on the discussions, and Disney CEO Robert Iger and NFL Commissioner Roger Goodell have been involved.
A deal would bring to a face-saving end an embarrassing episode for the NFL and a bitter stand-off between the lead and four of the nation's largest cable operators, a dispute which kept live pro football games on Thursday and Saturday nights out of many American homes.
An agreement would represent a big shift in strategy for the NFL—abandoning its effort to sidestep sports broadcasters like ESPN and take some of its valuable games directly to cable subscribers, who pay lucrative monthly fees. It would also send a message to sports organizations, which have enjoyed rising television fees for years, that even the biggest and most powerful sports league in the U.S. cannot launch a new channel without the consent of big cable operators such as Comcast Corp. and Time Warner Cable Inc.
One possible scenario could be a combination of the NFL Network with the ESPN Classic network, which has relatively low ratings but wide distribution on expanded basic tiers. ESPN would likely use its market weight and its eight additional games to seek higher subscription fees than the 16 or 17 cents it currently receives for ESPN Classic, boosting rates to something closer to what the NFL network has been seeking, according to Derek Baine, a senior analyst for SNL Kagan. Under such a scenario, ESPN and the NFL could form a joint venture and share revenue, or ESPN could take an equity stake in the channel.
"We have a long-term and extensive relationship with the NFL and to that end we are always in discussions with them about mutual projects," says Mike Soltys, vice-president of communications for ESPN.
The NFL ran up against the cable operators in early 2006, when the league decided to withhold eight games from its lucrative TV licensing packages to put on the channel. In effect, the league was giving up more than hundreds of millions of dollars in potential licensing revenue to gain leverage with cable operators in securing distribution for its network. But it was trying to create a valuable cable asset with no middleman. The NFL also may have misplayed its hand, demanding about 70 cents per subscriber. Cable operators balked, and football fans didn't protest as much as the league thought they might.
Cablevision Systems Corp. and Time Warner Cable have refused to carry the NFL Network on the league's terms. Comcast, the country's largest cable operator, pulled the NFL Network from millions of homes after a bitter battle over the rights to the eight games, for which it had offered over $400 million.
The NFL Network is currently carried only by upstarts like DirecTV and Verizon Communications —putting it approximately 40.3 million homes, according to Nielsen Media Research. It averaged 196,000 viewers during prime-time in 2007, according to Nielsen. ESPN Classic is on expanded basic and digital basic tiers in 62.7 million homes, according to ESPN.
[FONT=times new roman,times,serif][FONT=times new roman,times,serif]By SAM SCHECHNER, MATT FUTTERMAN and MERISSA MARR
June 20, 2008 5:10 p.m.[/FONT]
[/FONT]
Walt Disney Co.'s ESPN cable sports network is in talks to form a partnership with the National Football League's NFL Network, according to people familiar with the situation.
Steven Bornstein, chief executive of the NFL Network and previously chairman of ESPN and president of Disney's ABC network, has been holding high-level discussions with Disney executives in recent weeks, according to several people familiar with the situation. Some team owners have been briefed on the discussions, and Disney CEO Robert Iger and NFL Commissioner Roger Goodell have been involved.
A deal would bring to a face-saving end an embarrassing episode for the NFL and a bitter stand-off between the lead and four of the nation's largest cable operators, a dispute which kept live pro football games on Thursday and Saturday nights out of many American homes.
An agreement would represent a big shift in strategy for the NFL—abandoning its effort to sidestep sports broadcasters like ESPN and take some of its valuable games directly to cable subscribers, who pay lucrative monthly fees. It would also send a message to sports organizations, which have enjoyed rising television fees for years, that even the biggest and most powerful sports league in the U.S. cannot launch a new channel without the consent of big cable operators such as Comcast Corp. and Time Warner Cable Inc.
One possible scenario could be a combination of the NFL Network with the ESPN Classic network, which has relatively low ratings but wide distribution on expanded basic tiers. ESPN would likely use its market weight and its eight additional games to seek higher subscription fees than the 16 or 17 cents it currently receives for ESPN Classic, boosting rates to something closer to what the NFL network has been seeking, according to Derek Baine, a senior analyst for SNL Kagan. Under such a scenario, ESPN and the NFL could form a joint venture and share revenue, or ESPN could take an equity stake in the channel.
"We have a long-term and extensive relationship with the NFL and to that end we are always in discussions with them about mutual projects," says Mike Soltys, vice-president of communications for ESPN.
The NFL ran up against the cable operators in early 2006, when the league decided to withhold eight games from its lucrative TV licensing packages to put on the channel. In effect, the league was giving up more than hundreds of millions of dollars in potential licensing revenue to gain leverage with cable operators in securing distribution for its network. But it was trying to create a valuable cable asset with no middleman. The NFL also may have misplayed its hand, demanding about 70 cents per subscriber. Cable operators balked, and football fans didn't protest as much as the league thought they might.
Cablevision Systems Corp. and Time Warner Cable have refused to carry the NFL Network on the league's terms. Comcast, the country's largest cable operator, pulled the NFL Network from millions of homes after a bitter battle over the rights to the eight games, for which it had offered over $400 million.
The NFL Network is currently carried only by upstarts like DirecTV and Verizon Communications —putting it approximately 40.3 million homes, according to Nielsen Media Research. It averaged 196,000 viewers during prime-time in 2007, according to Nielsen. ESPN Classic is on expanded basic and digital basic tiers in 62.7 million homes, according to ESPN.
