ESPN and the NFL stunned the sports world with a sweeping deal that sends NFL Network and RedZone to ESPN in exchange for a 10% stake in the four letters worth an estimated $2.5 billion.
This complicated deal leaves a lot of unanswered questions. To get answers, Front Office Sports sat down with ESPN chairman Jimmy Pitaro, NFL chief operating officer Hans Schroeder, and Disney corporate development chief Justin Warbrooke on Wednesday.
Will anything change with RedZone?
No. Anchor Scott Hanson, who just signed a new contract with NFLN, will host for the 17th straight season. And NFLN will continue to own, operate, and produce the popular whip-around channel. RedZone will not be included in ESPN’s new direct-to-consumer platform. However, fans will be able to order an ESPN DTC bundle with the NFL+ Premium subscription service that includes RedZone.
Could there be more RedZones?
Yes. The NFL will produce RedZone and maintain its digital rights. But ESPN gets rights to the brand itself—as well as linear distribution through cable operators. So down the road we could be looking at ESPN’s NBA RedZone, College Football RedZone, NHL RedZone, and so on.
Jimmy Pitaro: “We have the opportunity to expand the RedZone brand to other sports, other leagues. We would do that in partnership, and in concert, with the NFL. Of course the other leagues would need to agree to it. We’re starting to think about what we can do. We are very passionate about the RedZone brand. We think it’s very compelling and there’s a lot of value there.”
Hans Schroeder: “ESPN is acquiring the RedZone trademark. … Certainly you could see different RedZones with different sports. They could certainly build out the RedZone channel to be more than seven hours a week if they wanted to.”
Why is ESPN doing this deal?
ESPN decided the chance to add more NFL content—under its own umbrella—was too good to pass up. Pitaro also thinks the deal will drive new business. The chairman believes more NFL content will fuel the new DTC business. And be a big selling point as ESPN negotiates with cable operators.
Pitaro: “This is incredibly consumer-friendly. It will give the sports fan and the NFL fan and the football fan another way to consume NFL content. At the same time, we believe this content, from games to studio programming on the NFL Network side, is incredibly high-quality. It will help us grow subs.”
Why is the NFL doing this deal?
The league talked to multiple potential business partners over the years but in the end decided ESPN was the “right” partner.
Schroeder: “As we look out and think about how we try to engage fans, and try to give them a 24/7, 365 experience around the NFL, and do that across all our assets, the unique elements and resources and scale and programming expertise that ESPN brings to everything they do … we thought it was just a tremendous opportunity to partner with that—and bring that to the NFL Network. So the NFL Network could be as strong as it can be and as it has been for 20 years.”
When is the deal expected to close?
The two sides still need to hammer out a final agreement and get approval from NFL owners as well as the federal government. Disney EVP of finance Justin Warbrooke tells FOS they are looking at “late” next year: “It has to go through the regulatory review process.”
Will ESPN get more live games, and will NLFN still show games?
The answer to both is yes. Under the deal, ESPN will purchase three additional games from the league. That will increase its offerings to 28 games versus 25 this season. To keep NFLN’s seven-game schedule whole, ESPN will shift three games that previously aired exclusively on ABC to NFLN. Plus, one that aired exclusively on ESPN+.
Is the NFL’s fantasy business included?
Big time. The deal merges NFL Fantasy Football with ESPN Fantasy Football. The NFL thinks the sky’s the limit by combining the two platforms.
Schroeder: “Fantasy is still an incredible [business for the league], with tens of millions of people playing NFL fantasy. Looking at what ESPN could do to further evolve that? We were really excited about it.”
Does this give Disney/ESPN most favored nation status among NFL media partners?
Pitaro: “We do not expect any preferential treatment whatsoever from the league. As we move forward here, in terms of any future rights negotiations, those will be held at arm’s length, just like they always have been. Nothing changes as a result of this equity transaction.”
Schroeder: “We’ve really learned and know how to balance that [equity] piece of the partnership as well as the arms-length aspect of the partnership. Especially in areas where we have multiple partners.”
Any early read on President Donald Trump’s reaction?
That’s still to be determined. Pitaro says he’s looking forward to touting the deal’s “pro-consumer, pro-competitive” benefits.
Pitaro: “We expect this transaction to be reviewed on its own merits. But we are confident the deal is pro-consumer, pro-competition—and we are prepared to explain that.”
What will be left of NFL Media?
The league will continue to own and operate NFL Films, NFL.com, NFL+ Premium, the NFL Podcast Network, NFL FAST Channel, and the official websites for the league’s 32 clubs.
