NFL Scanning Field for Broadband Play

Jan 23, 2006  •  Post A Comment

The National Football League-whose games are among the most valuable content on television-is considering making a deal with an Internet company to put some

of its regular-season games exclusively online.

The deal, which would be revolutionary in impact, would be for the new package of late-season games to be played on Thursday and Saturday nights that the NFL has been shopping since last year.

The NFL confirmed that talks with at least one Internet player were happening. An NFL spokesperson said that in addition to talking with the traditional broadcast and cable companies interested in carrying the new package, the league is also having discussions with telephone and Internet companies.

Internet company America Online already has a relationship with the NFL, showing footage from NFL Films and presenting the commercials from the Super Bowl online, which last year generated 22 million streams.

Carlos Silva, VP of AOL Sports and News, said he couldn’t discuss specifics of ongoing negotiations, but said, “We’re in the middle of sort of finishing up that relationship and talking about what the next relationship is.”

AOL has broadcast live March Madness college basketball games before, and webcasts WNBA games. It has been looking for big events, such as the recent Live 8 concert, to drive viewers to its site.

An NFL game would qualify as an event that AOL could enhance. “Maybe you could add some features, even cameras, and certainly interactivity and polling and community, which is a big part of what we do,” Mr. Silva said.

Whether NFL games would be available free on AOL.com would be up for discussion, Mr. Silva said. “Live 8 was free, and we’ve been a big innovator in bringing big audiences together,” he said. “We can bring a big audience together, and that benefits everybody-us, the advertisers the leagues-if you can put it all together, and it helps you create a bigger community.”

What is clear is that the NFL realizes that there is a lot of potential is moving beyond the traditional telecasts of games on broadcast, satellite or cable. “We’re in a new digital world,” an NFL spokesperson said. “There are more pieces than just eight games in live windows.”

The league’s digital rights expire at the end of the season.

That the NFL would do an exclusive deal with an online player for its new package of games, which are likely worth about $400 million, was met by skepticism by some analysts and consultants.

“To me that would be really surprising,” said John Mansell, senior analyst for Kagan Research, of the possibility that the package could be bought by a new media company exclusively. “I could see them talking to those people in addition to the television players. I guess maybe a Verizon or an SBC might try to get an exclusive to get off the ground, but they don’t have enough distribution to make it worthwhile.”

“I don’t think the NFL would forgo up to $400 million to go down the broadband road at this point,” said sports rights consultant Neal Pilson. “I’m sure it’s a scenario they will look at. I think it’s more likely they’ll go with a traditional carrier such as a Comcast or Fox Sports channel, or a venture that will involve the NFL Network.”

Aside from the money for the package, there is the question of eyeballs. If, for example, Comcast won the package, it’s likely the NFL package would be on OLN, which is available in 63 million homes. The number of broadband homes in the U.S. is estimated to be near 40 million by some analysts, with Forrester Research prognosticating that in four years about 71 million U.S. households will be broadband-savvy.

While confirming that there is discussion about the NFL package among various parties, the NFL spokesperson said no deal was imminent.

Broadband Driver

Will Richmond, president of Broadband Directions, said that sports could help drive broadband penetration and usage among fans.

“If it was the only place it was available, and the quality of the connection was high enough, they would come. If you’re a Jets fan, you’d be inclined to subscribe,” he said. But he said it might be too early for broadband to take on the NFL.

“I don’t think the broadband advertising and subscription business models have matured yet that a broadband-only player would be in a position financially to take that level of risk,” Mr. Richmond said.

“There’s no rush to be in this space for the sake of being in this space,” the NFL spokesperson said. “Based on our ratings, our ticket sales, all those measures, including NFL Network, our fans are adequately accessing NFL content.”

Another major professional sports league, the National Basketball Association, has already driven into broadband video with its games.

Mr. Pilson noted that the NFL doesn’t need to rush into broadband because “Every NFL game is on national television, unlike baseball, unlike basketball. Nor do the other leagues get the kind of revenue the NFL gets per game. They haven’t been as aggressive. They don’t need to be.”

Unlike other sports, the NFL has never allowed media outlets to rebroadcast its games. It allows its media partners to run highlights-a highlight reel runs on video-on-demand and one-hour cut-down versions of some games appear on NFL Network.

That’s something that will change in 2006, the NFL spokesperson said: “Broadcast versions of games will be available. We’re still exploring the format length and the best way to present them.”

For example, the Super Bowl, annually the highest-rated program on TV, is not rebroadcast.

“You’d think it’s logical to re-air it somewhere,” the NFL spokesperson said. “The truth of the matter is everyone who wants to see it is pretty much watching that day. Once you know the results, no one can escape the fact you’ll know the score of this game and what happened.”

Instead of simply re-running games, the league is looking at ways of enhancing them by including unseen material to give them a new spin.

“Anything we would do in the space would be after ensuring that we live up to our contractual obligations with them,” the NFL spokesperson said.