According to several sources, Amazon may be bidding on UK rights to the Premiere League. Coupled with the rumor Amazon may extend this season’s NFL experiment into something more significant, this indicates what all sports leagues are dreaming of: new money in the market that will support current rights fees. Even in a world of decreasing viewership for the NFL and most leagues, bidding competition will lead to higher rights fees overall.
The NFL’s musical chairs
This has played out numerous times in the past, with particular focus on the NFL here in the USA. After three decades of stable coverage on CBS, NBC, and ABC, the emergence of the FOX network in the 1990s created a two decade game of musical chairs. FOX outbids CBS for their package, so CBS is out. Then CBS outbids NBC for their package, and NBC is out. And most recently, NBC outbids ABC for Monday Night Football, gets it moved to Sunday nights, and ABC’s Disney stablemate ESPN takes Monday Night Football to cable.
On cable, quite a number of networks grabbed the crumbs off the table, most notably TNT and ESPN (which ended up with MNF as noted above). The NFL even created its own stalking horse, the NFL Network, to bid on a new package of Thursday night games – which finally ended up as a Frankenstein package of split seasons on CBS and NBC, while being simulcast on NFL Network, Twitter, and Amazon.
The new entrants
The point here is that the entry of extremely deep-pocketed companies like Amazon and Facebook into the market for sports rights guarantees that there will be no “correction” in their value relative to overall viewing levels. The scarcity of, and the competition for, these sports packages will support their current values – or even make them more expensive.
It’s the counterintuitive situation seen for TV overall – ratings for individual broadcast networks tend to drop every year, but advertising CPMs always seem to rise. But the answer is rather simple – even with large drops in viewership, broadcast networks still bring more eyes to the screen than any other option.
The same logic applies to the NFL or other sports leagues. Even as the NFL’s viewership has dropped close to ten percentage points each of the last two years, it’s still by far the #1 program on TV or any video screen. And while its competitor leagues like the NBA, NHL, or NASCAR may not have the gaudy mainstream reach of the NFL, they each do have a strong appeal to particular slices of the population.
Would an Amazon or Facebook face strong challenges trying to bring quality coverage of a major sport? Absolutely. Will sports leagues totally cut out their bread-and-butter TV partners for a mountain of digital dollars? It’s unlikely (for an illuminating case study, check out the history of the NHL’s ill-advised agreement with SportsChannel in the late 1980s, where the NHL took a lot of money but set back the league several years in media exposure and brand-building).
What may happen
The likely outcome of a digital push into rights will be a continuation of the current situation where digital coverage will be partnered with traditional TV coverage. Perhaps the digital coverage will be allowed to do more innovative coverage elements or shoulder programming, to allow avenues for innovation. In any case, the next rounds of bidding for the NFL – and other leagues – will be quite interesting and may even lead to some surprises.
David Tice is the principal of TiceVision LLC, a media research consultancy.
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