The NFL is taking issue with a new report about ESPN’s impending renewal of its Monday Night Football package, and while much of the substance of Friday’s story in Sports Business Journal lines up with the unofficial narrative that’s been developing over the last several months, the leaked dollar figures don’t seem to add up.
SBJ reported that a formal agreement between the NFL and ESPN parent company Disney was “very close at hand,” while noting that no contracts have been signed. The new deal is also expected to usher ABC back into the Super Bowl broadcast rotation for the first time in 15 years.
None of this is exactly controversial—in fact, much the same may be said for the current status of the CBS, Fox and NBC Sunday NFL deals. Which is to say, the status quo largely will be upheld, at least on the linear TV side of the ledger, although the cost of maintaining the current lineups will be far steeper.
The specific pricing as laid out by the SBJ story is where some insiders have a beef, as the current ESPN contract is overvalued at $2 billion per year versus the $1.9 billion ESPN signed off on in September 2011. Naturally, that inflation throws off the overall worth of the new arrangement. That said, no one is arguing with the implication that Disney is not paying anywhere near as high of an increase over its base rate.
While the NFL is angling to nearly double its current rights fees, there was no way Disney was going to force a $3.9 billion Monday Night Football package on its investors. CEO Bob Chapek effectively said as much earlier this month on the company’s earnings call: “We’ve had a long relationship with the NFL and if we have a deal, if there is a deal that will be accretive to shareholder value, we will certainly entertain that and look at that. But our first [priority] will be to ask whether it makes sense for our shareholders going forward.”
If this sort of public chest-thumping isn’t necessarily designed to endear oneself to the NFL, Chapek was doing his best to manage investor expectations. Once the inevitable Sergio Leone whistling died down along with the who’s-got-the-leverage? chatter, it was time to get back to hammering out a mutually agreeable renewal.
Which is not to say that any of the NFL contracts have made it to the notary stage; as an NFL rep said when asked about the SBJ story, “The report is incorrect and as we don’t negotiate through the media, there will be no further comment.”
So there you have it.
On the whole, there’s not much in the SBJ report to raise the hackles, as the likelihood of ESPN punting away its NFL rights was never great to begin with. Not only does Monday Night Football and its attendant shoulder programming account for nearly 20% of all time spent on the linear cable channel, but the highlights and video rights that are bundled in with the live game coverage are the lifeblood of ESPN’s highest-rated studio shows.
More to the point, in the absence of the NFL, ESPN wouldn’t be able to justify the massive carriage fees it receives from its cable, satellite and telco distributors. By the time its current NFL contract expires at the end of next season, ESPN’s monthly sub fee will be a little north of $9 dollars per customer, which translates to an annual haul of some $8.8 billion in revenue before a single ad unit is sold.
More from Sportico.com