Each of the NFL’s domestic linear rights holders is particularly exposed to potential downward trends in the media business, according to one prominent financial analyst, raising the stakes further for the league’s upcoming renegotiations.
As the league prepares to start talks this year targeting a new set of rights pacts, Bank of America said NFL games are the glue holding much of legacy media together. That, by itself, is not surprising as the league enjoyed its best regular-season viewership since 1989, neared another U.S. television audience record for Super Bowl LX, and in any given year dominates the list of top 100 U.S. broadcasts, regardless of genre.
The soon-rising cost of those league rights, however, represents a heightened pressure point for Comcast, Disney, Fox, Paramount, and their respective networks.
“NFL-related content at this point is the key linchpin holding the linear cable bundle together, a massive driver of linear advertising dollars, retransmission fees, and even more recently, direct-to-consumer sign-ups. This market paradigm has not gone unnoticed by the NFL,” Bank of America analysts wrote in a research note released Wednesday. “In short, it is hard to paint a positive outcome from the traditional media ecosystem perspective.”
As the collective annual costs for those four media companies to retain NFL content is set to rise beyond the current total of about $9 billion, the analysts detailed a series of negative scenarios in play. The possible outcomes for the incumbent rights holders include being priced out of having NFL rights entirely, seeing their corporate bottom lines decline significantly, or a hybrid situation where they pay more in future rights fees for less content.
Most exposed of all, in the analysts’ view, is Fox. The company received a downgraded rating from “buy” to “underperform” as it is viewed as particularly reliant on NFL games to drive its overall business.
“It is our view that an accelerated NFL media rights negotiation would immediately place financial and strategic pressure on Fox,” they wrote.
The company is already well aware of the approaching challenge, and during an earnings call earlier this month, Fox executive chair and CEO Lachlan Murdoch said there could be a “rebalancing” of the Fox sports rights portfolio—typically corporate code for cutting certain assets to help keep other, more valued ones.
“It’s obviously tremendous, tremendous content for us. And they’ve been a really fantastic partner,” Murdoch said of the NFL. “We have the ability to offset a portion of any kind of cost increases because we look at our sports portfolio as a whole. We would certainly consider balancing or rebalancing our portfolio as we move forward, when those opportunities become available. So we feel pretty comfortable about the sports business.”
Market Dynamics
The NFL has a contractual opt-out with most of its rights holders after the 2029 season, but given the size and complexity of the contracts, talks are expected to begin in earnest this year. Prior to Super Bowl LX this month, NFL commissioner Roger Goodell said the league will be looking to maximize both reach and revenue in new pacts.
“What we focus on is ‘How do we reach the broadest number of people, on every broadcast? How do we make an event out of that?’” Goodell said in response to a Front Office Sports question. “We select our partners in part for that reason. Economics are obviously part of that, the value that’s created. But at the end of the day, we want partners who are going to broaden our audience.”
Raising the pressure further is a small package of games already on the market. The NFL regained control of four games annually amid its complex and newly closed equity deal with ESPN parent company Disney. The league is shopping that inventory now, and that will provide an updated sense of what both linear and streaming networks are willing to pay.
Several other leagues, including the NHL and PGA Tour, are reportedly looking to get an early jump on their own rights renewals to help keep their markets as large as possible and avoid being squeezed by network suitors tapped out financially by the NFL.
