The NFL Network/NFL Sunday Ticket vs. Cable Stalemate is Stale

by Josh Kirkendall on Nov 16, 2007 12:15 PM EST in Time Warner vs. NFL Network

Take this perspective. When the NFL Network tells you that Time Warner is preventing you from seeing their games and 24x7 coverage, do they really think you're that stupid? It is, after all, their ridiculous assertion that taking the games away from all but 35 million households (of which only 1.6 million subscribe) is Time Warner's fault -- not the network that journeyed the games to Rivendale where no one else can find it, unless it wants to be found. The Big Ten Network is taking the same approach. And each time I'm told that both networks are being prevented from reaching their target audience, I laugh. If these networks weren't created, the games wouldn't be broadcasted on those channels. Simple as that. Don't take us for fools.

"Cable companies swim in a multi-billion dollar tower of gold coins." Both networks are just as greedy establishing channels to increase revenue for their respective product. If the cable companies are greedy, then the networks aren't? They're the victims? Furthermore, if Oprah created her own channel, would you be willing to pay for that general increase on your bill for basic? Or would you agree it should be on a digital tier that you would have to pay for to receive so the cost isn't spread out among all cable subscribers?

"Cable companies could absorb the costs and not charge anyone." The first question that has to be asked is do you run a business? Furthermore, take the Oprah hypothetical -- because obviously you'll be more willing to pay for the NFL Network if you were the CEO of cable company-A. The NFL is demanding between 50-75 cents per-subscriber while the Big Ten Network is asking for a full dollar per-subscriber. For comparison, ESPN charges $3.26 per customer -- "by far the highest rate of any U.S. basic cable channel."

Currently, the NFL receives $712.5 million per year from Fox to air NFC games. CBS is paying $622.5 million a year to air AFC games. Between the two networks, that's $8 billion that will paid through 2011. DirectTV, with exclusive rights to air the games of both networks, paid $3.5 billion for the NFL Sunday Ticket package. Now, we're up to $11.5 billion. NBC is paying $650 million per year on a contract that runs through 2012 for Sunday Night football. ESPN is paying $1.1 billion a year through 2014 for Monday Night football games. [Source: ESPN]

All television contracts added up, that's $3.785 billion per year that the NFL receives. Talk about greedy. The Cable companies pay service, InDemand, had offered a bid for NFL Sunday Ticket in 2002 before an agreement was reached for an extension between the NFL and DirectTV. The Cable Companies didn't care for exclusive rights, they just wanted to broadcast it. The cable companies missed the deadline and the league reupped with DirectTV.

Note: The Super Bowl produced $336 million in revenue.[Source: Forbes]

So what does the NFL suggest to you, the viewer that wants the NFL Network, but can't have it because their near $4 billion revenue on television contracts just isn't enough? They are urging you to cancel cable and get satellite. Yep. That's how low and panicked they are now. Jerry Jones threatens more games will be aired exclusively through the NFL Network. Even Congress is being asked to intervene. Mommy is being asked to settle another dispute.

"I'm talking to various markets and asking them to cancel out Comcast, cancel out Time Warner and go with the other people," Jones, who chairs the NFL owners' TV committee, said during a news conference here. "I think it will be very effective."

Representatives of Comcast and Time Warner Cable disagreed.

"We don't think any of our customers will disconnect just because Jerry Jones tells them to do so," says Maureen Huff, a spokeswoman for Time Warner Cable, which does not carry the channel. She also says most customers believe the NFL created problems for viewers by taking eight games from over-the-air TV and using them to build its channel.

Gregg Easterbrook notes the NFL's hypocrisy:

Reader Scott Larson of Grand Rapids, Mich., notes that after the NFL owners meeting last week, commissioner Roger Goodell complained, "We have some great games that are going to be on, and some [viewers] won't be able to see them because the cable operators are not distributing them." Reader Steve Lucianetti notes that after the same meeting -- called to help the owners strategize about the refusal of Time-Warner and Cablevision to carry the NFL Network -- Jerry Jones, owner of the Cowboys, complained the cable companies "depend on privileges at the government level, and they shouldn't use those privileges to keep fans from being able to see the NFL."

The doublespeak here is rich. The NFL restricts its magnificent Sunday Ticket product, which enables viewers to choose for themselves which game to watch, to the lucky few who get the satellite service DirecTV. Millions of homes cannot receive DirecTV for technical reasons or can pull in the signal only after expensive special installations. Frank Hawkins, the NFL's chief negotiator for television contracts, told me that when he lived in Virginia, his home could not receive DirecTV until he had a tall metal pole installed in his backyard. Yet although the NFL won't let anyone in the U.S. except DirecTV subscribers watch Sunday Ticket, the league is furious that Time-Warner and Cablevision won't buy the NFL Network and Comcast will buy the NFL Network for its premium sports tier only. The NFL wants NFLN on every basic cable system, which was the path to success for ESPN and CNN. A war of words has broken out, in which the NFL is denouncing the cable carriers in consumer-rights language while asking that Congress intervene to force the NFL Network onto basic cable. The cable carriers are firing back, accusing the NFL of all manner of perfidy. Meanwhile, 35 million households already get the NFL Network, while only 1.6 million get Sunday Ticket -- and the consumer's barriers to Sunday Ticket are much higher than the barriers to the NFL Network.

Easterbrook concludes:

Meanwhile, there's the cell phone factor. Some cable executives contend there is little point in chasing Sunday Ticket because all the people who want the service already have migrated to DirecTV. Sure -- all the people who want it at $250 a year, plus bundled charges, plus the hassle of installing and maintaining a satellite dish. If Sunday Ticket were $50 a year and came hassle-free through cable or any other hassle-free electronic pipeline that might evolve, instead of 1.6 million households getting Sunday Ticket, 25 million might sign up. Then consumer costs would be lower but business revenues higher -- $1.3 billion instead of $400 million in that example -- and what was once a luxury for the privileged few could be possessed affordably by almost anyone. Just like what happened with cell phones! Come on NFL, let us choose which game to watch. We'll pay, you'll be richer and you can stop speaking out of both sides of your mouth, demanding public access to the NFL Network while restricting public access to Sunday Ticket.

Note: Combined, Time Warner and Comcast reported $68.5 billion in revenue in 2006. Time Warner ($43.6 billion in 2006) Comcast ($24.9 billion in 2006).

So basically, with all that said, nothing has changed in the past three years.

Cable Plays Hardball With the N.F.L. [NY Times]
Of Tiers, Football and Dollars [NY Times]

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