NFL Broadcasters Face Crucial $105 Billion Stress Test as New Season Kicks Off
(Bloomberg) -- America’s media giants in March hitched their wagons to the NFL for another decade. Next month, they’ll find out whether that $105 billion was money well spent.
The new NFL season, which begins Sept. 9, will provide a crucial stress test of the popularity of TV’s biggest attraction. Last year, NFL regular season viewership fell 7%, marking the first drop in three years. But it was hard to tell if fewer people watched because of declining interest in the sport or due to Covid-related disruptions, including an unusually crowded sports calendar, games played without fans and players sidelined by the coronavirus.
Now, CBS, NBC, Fox, ESPN and Amazon.com Inc. will get a clearer picture of what they will be paying for through 2033: an entertainment property largely immune to the pressures facing the rest of TV or one that’s also starting to slip.
“The first four weeks of the season will be very telling,” said Patrick Crakes, a consultant and former Fox Sports executive. “If the NFL ratings are flat and everything else on TV is down 20% that will justify the investments they made.”
Hans Schroeder, executive vice president of NFL Media, said it wasn’t unusual for NFL ratings to dip during an election year, like 2020. He expects viewership to be strong this season, citing higher preseason ratings, intriguing matchups between high-profile teams and the return of fans to stadiums.
“We just think there’s a lot of excitement around football,” Schroeder said. “All the indicators we look at — with the engagement of our fans and how things are pacing this August — are really strong.”
NFL broadcasters will experiment this season with new formats and distribution. ESPN is enlisting former NFL quarterbacks Peyton Manning and Eli Manning to take part in an alternate, fraternal Monday Night Football telecast. For the first time, NBC will stream Sunday night games on Peacock, and the online service will air a new postgame show afterward. It will be the last season that Amazon shares Thursday night broadcasts with Fox and the NFL Network before it takes over the exclusive rights in 2022.
Anxious sports broadcasters will be looking to the NFL for some reassurance. Major sporting events are drawing more viewers this year than in 2020. But, for the most part, the ratings are down significantly from pre-pandemic times. Compared with 2019, the NBA playoffs fell 18%, the March Madness final declined 14% and the final round of the Masters golf tournament dropped 13%. The Summer Olympics viewership slumped to its lowest mark in over 30 years. The NHL regular season sank to its smallest audience in at least a decade, and the Super Bowl fell to its lowest level since 2007.
“For most other sports, you’ve had a very weak 12 months in terms of consumption,” said Michael Nathanson, an analyst at MoffettNathanson LLC. “Everyone is looking to the NFL to come back strong to give you that feeling of normalcy.”
This year’s NFL ratings could determine how much media and tech giants are willing to pay for a separate package of games known as NFL Sunday Ticket. The rights to those games could leave DirecTV when its contract expires at the end of next season. The bidding process is set to begin in the coming months, with Walt Disney Co.’s ESPN, Amazon and Apple Inc. seen as potential buyers.
Before last year’s decline in ratings, the NFL had managed to buck the industrywide erosion of TV viewers. In 2018, regular season ratings rose 5%. In 2019, they went up another 4%. “For the past couple of years the NFL has been living in its own world,” Crakes said.
Despite the ratings drop last season, the gap between NFL audiences and those for the rest of TV grew wider. In 2018, NFL ratings tripled those of primetime broadcast TV, excluding sports. Last year, the NFL quadrupled them. With few equivalent ways to reach a mass audience, advertisers are still willing to pay top rates for NFL commercial time. Ad revenue from NFL broadcasts increased 2% last season to reach $3.7 billion, according to Standard Media Index. NBC said in July that it had already sold 85% of the commercial time for the next Super Bowl in February.
Sports ratings, especially those for the NFL, are heavily scrutinized as a bellwether for the broader health of the TV industry.
“The NFL is the glue that holds the ecosystem together,” Nathanson said.
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