With $110 billion due between 2023 and 2033, the NFL appears to be in no hurry to jump to a direct-to-consumer OTT service. The pay TV channel is still far too valuable to ditch, but opening the door for the broadcasters’ streaming services is helping to cover the bases, in case pay TV suffers a colony collapse.
The main question here is how much of the price rise can be attributed to inflation, and how much is being pegged to the new access that the broadcasters have secured for their streaming services? This new round marks the first time that a streaming-only non-TV broadcaster has been picked.
This is, of course, Amazon Prime, which from 2023 has the exclusive rights to the Thursday Night Football package – which means that you will not be able to watch every game via a single pay TV package. Previously, your local market would dictate which of the Sunday games you would see, but you could watch every Monday and Thursday night game through your cable or satellite bundle.
From 2023, you are going to need an Amazon Prime subscription to catch those Thursday games, an extra $120 per year, and access to ESPN+ for an exclusive game in the International Series, as well as to Comcast’s Peacock, for an undisclosed number of exclusives too.
For Amazon, NFL exclusivity makes Prime stickier and more attractive. It would be quite the coup for Amazon if it could also secure an exclusive deal for the Sunday Ticket package. Amazon, Disney, and Apple have all been rumored as interested parties. However, suggestions that the Sunday Ticket would no longer be an exclusive deal have been banded around with such fervor that it seems to be a given, meaning that the NFL is likely to make a killing here too. AT&T’s DirecTV has held that contract since 1994, so this is the end of an era.
For the NFL, and sports leagues in general, streaming is often talked about as a way to create new fans and viewers. Expanding their reach via streaming services should create new opportunities for this, but the NFL in particular has struggled to attract younger viewers. This is not the case for all sports, but something that American Football in particular has grappled with.
But the shift to streaming does not seem to be happening any time soon. Fox Sports EVP Michael Mulvihill declared on Twitter that “94% of NFL game inventory in the new deals stays on linear TV. The NFL became king in media by limiting supply and valuing reach and that doesn’t change much.”
Returning to our main question then, of how much the rise in the value of the deals is due to streaming, and it seems that the participants agree that it amounts to not very much at all. The price that the new broadcasters pay for the Sunday Ticket is the only outstanding variable there, and even if all the parties combine to pay double what DirecTV used to, it’s still a minority share of the NFL’s total annual take.
As of 2023, that take will be just over $10 billion a year, plus whatever the NFL secures for the Sunday Ticket. Realistically, the total will probably sit in the $12 billion to $13 billion range. If you exclude the Sunday Ticket, this puts the NFL’s media revenues at just over $110 billion. When you include our estimate, this jumps significantly, to some $138 billion.
In terms of CAGR, that running total is growing by 24.4% annually. This then suggests that the streaming revenue is just under 20% of the total, which, if Fox claims about 94% of NFL inventory remaining on linear TV is accurate, seems rather disproportionate. Based on the dollars, streaming looks significantly more valuable on a per-game basis, at 6% of the games but nearly 20% of the revenue.
For some context, our Rethink TV research service published a 2018 forecast for global sports rights, and predicted the total market growing from $48.5 billion in 2018 to $85.1 billion in 2025. As you can see in the graph below, at the end of the period, we see the beginning of an upturn, and as we are planning on updating this forecast shortly, the NFL might just have shifted the needle enough that this uptick needs to begin earlier.
Digging into it, it seems that the NFL has doubled the fee paid for its Thursday Night Football coverage. Fox used to pay $660 million for those, but now Amazon Prime has committed $1.32 billion for them – and will produce its own broadcast, rather than simulcasting Fox or the NFL Network’s. In a similar vein, Fox used to pay $1.1 billion for the Sunday Afternoon games in the NFC conference, but had to sign the new 10-year deal at around $2 billion.
Speaking at a UBS conference, in December, Fox CFO Steve Tomsic said that Fox could consider ditching the Thursday games, if it had to make a choice between them and the Sunday afternoon slot. Well, it seems that Fox had to make that call, and despite cutting the Thursday slot, it is now paying about $200 million annually more than it used to. That’s a pretty good shakedown by the NFL.
NBC Sports’ president of programming, Jon Miller, had warned that this round of deals would be the biggest seen in television, when speaking at an online event. However, Miller added that the magnitude of these would force broadcasters to “wield Solomon’s sword” and make tough choices about which sports properties they most want to hold onto.
In that example, sports rights are a baby and the broadcasters are the mothers that both claim the child to be theirs. This comparison has a lot of legs, especially as the mothers’ dispute stems from a child shortage owing to an already-smothered baby. Solomon orders the remaining baby to be evenly divided between the mothers, using his aforementioned sword, and the moral of the story is that the real mother is the one who asks Solomon not to do this and lets the imposter mother have the child. Thus, Solomon knows who the real mother is, as the imposter was completely fine with his initial ruling.
We’re not really sure who Solomon should be in the sports rights retelling, and there’s ambiguity about the mothers too – and this is before we look at the differences between this King James retelling and the versions that appear in the Hebrew Bible. However, it seems fair to say that the broadcasters are viewing the near future in biblical terms, and those bibles contain rather a lot of bloodshed.
As for who got what, Disney’s free-to-air ABC got two Super Bowl slots, and select exclusive regular season games, while ESPN retained Monday Night Football, and ESPN+ gets one exclusive International Series game. Amazon netted Thursday Night Football, as Fox declined to renew that deal. Fox retains its Sunday Afternoon deal for the NFC games, and these are going to be available on its Tubi streaming service.
Comcast’s NBC has retained the Sunday Night games, which will also be shown on the Peacock streaming service. Peacock is also getting some as-yet-undisclosed exclusive regular season games. CBS kept its Sunday Afternoon AFC games, which are also going to be available on Paramount+. Amazon is expected to get a chunk of the Sunday Ticket too, but Disney and ESPN are also thought to be in the mix.