Fox Is Poised to Spend up to $2 Billion to Keep Sunday Football

Fox Corp. is willing to spend as much as $2 billion a year to maintain its rights to National Football League games on Sundays, a huge increase from its current contract, according to people familiar with the matter.

Under the existing arrangement, the network airs games from the National Football Conference, featuring teams from the big media markets of New York, Chicago and Los Angeles. That makes it the most-coveted outlet for advertisers.

Now Fox has to fend off other broadcasters, which also want to air high-profile matchups. Negotiations with the league are heating up because current broadcast rights begin expiring at the end of next year, starting with Walt Disney Co.’s ESPN and its deal for “Monday Night Football.” Talks between the league and the networks are already underway, but at an early stage, Fox Chief Executive Officer Lachlan Murdoch told investors this month.

“The NFL has asked, I think, all the broadcasters to think about every package, and to think how would we monetize packages that we currently have or other packages differently,” Murdoch said. “So, we’re looking at all sorts of options.”

Fox Is Poised to Spend up to $2 Billion to Keep Sunday Football

Other networks are interested in the Fox games and have been pressing the league to reconfigure the rights to allow them to air some of them, according to the people, who asked not to be identified because the negotiations are private. A spokesman for Fox declined to comment.

The NFL, which kicked off its new season Sept. 10 despite the challenges of the coronavirus, is the most-valuable media property in sports, generating more than $5 billion a year in fees for team owners. Negotiations were expected to conclude this year, but progress has been thwarted by the challenges of returning to play during the pandemic and now aren’t seen getting done until 2021.

Seeking Leverage

With all of its properties up for renegotiation at the same time, the NFL has an opportunity to pit the major broadcasters against one another and get the most money possible. The Thursday night games, which draw the smallest audience on traditional broadcast TV, will be the toughest sell, according to the people.

Fox, a cable-TV and broadcast company controlled by the Murdoch family, sold most of its entertainment assets to Disney last year as part of a strategy to focus on sports and news. The company pays about $1.1 billion a year for its Sunday rights and $660 million for Thursdays, according to the research firm MoffettNathanson. Those games have “served us well,” Murdoch said.

Fox Is Poised to Spend up to $2 Billion to Keep Sunday Football

Comcast Corp.’s NBC is happy with its Sunday night football rights and expects to pay more for them, according to a person familiar with the company’s plans. As part of its negotiations, NBC may push to air more NFL games on its new streaming service, Peacock. The league has already approved plans for NBC to stream a playoff game in January on Peacock, which launched nationwide in July and has more than 15 million users so far.

ViacomCBS Inc. CEO Bob Bakish told investors last week that he believes the company’s international and streaming assets will give it a leg up in bidding. ViacomCBS also announced it would be airing “Monday Night Football” games on its Channel 5 broadcast network in the U.K.

The league declined to comment, as did officials with CBS, which is paying about $1.1 billion a year for its Sunday football contract.

Highest Fees

Disney’s ESPN currently pays the highest annual fees for an individual package, $1.9 billion for “Monday Night Football.” That deal was negotiated to include rights for game highlights that the company could air on its various networks and shows. But those rights may be less valuable in an age when video clips can be seen everywhere online.

The TV sports giant is looking to get more for its money, potentially adding Sunday or Thursday night games, and featuring them on its ABC broadcast network, according to the people.

Disney Chief Financial Officer Christine McCarthy told investors this month that while the NFL is important to Disney, “we are going to look at this through a disciplined lens and make a decision that will be in the best interest of the company and the shareholders.”

Under one scenario, Disney would air Thursday games on ABC. That network was the home of “Monday Night Football” until the company moved the games to ESPN in 2006. ABC has suffered from a lack of sports, a big lure for male viewers in particular.

Disney plans to broadcast this Monday’s game, the first for the Las Vegas Raiders in their new arena, on both ESPN and ABC in what it called a “showcase” for Allegiant Stadium. Festivities included a halftime concert by the band the Killers on the roof of Caesars Palace.

It’s a showcase as well for the NFL, and may signal that Disney wants to join the rotation of networks hosting the Super Bowl, potentially bringing TV’s most-watched event to ABC.

The audience for the first week of NFL coverage was down overall from last year as football competed with the surge of sports playing out their delayed seasons later in the year due to the virus. The exception: Fox’s game featuring star quarterback Tom Brady with his new team, the Tampa Bay Buccaneers.

But with the NFL having gotten its season started more or less without a hitch, the league may be feeling confident that it will once again get big price increases for its product.

©2020 Bloomberg L.P.

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