A judge ruled that NFL owners won’t be getting money from TV networks during a lockout because the deal was not bargained in good faith with the NFL Players Association. This doesn’t mean that the TV networks will get off unscathed if the lockout extends to the playing season, as many fear.
CNBC writes that the credit rating company Standard and Poor’s says the companies will lose out of revenue from not broadcasting games. Not a surprise, as NFL games are not only highly rated but have expensive advertising because of their live nature (in other words, people are more likely to watch live than DVR and skip the commercials later).
Anyway, CNBC reports:
“In a worst case scenario of an entire lost season, we believe that the ad revenue decline during replacement programming and the drop in ad revenue for programs immediately following games would overwhelm the net savings of having cheaper replacement programming instead of the NFL production costs,” the report said. “Thus, even with the production cost savings, we believe there is a risk that the networks could still be subject to profitability declines for the season.”
Standard & Poor’s said NBC would probably suffer the most because it airs its games on Sundays in primetime versus CBS and Fox , whose games air during the day. Critics might say NBC is less exposed because it doesn’t have double headers — so it has less ad inventory. Thanks to greater access to alternative programming, due to the other sports rights it owns including college football, the effect on ESPN’s business would be more modest, according to S & P. It is also believed that ESPN is less exposed because cable operators own some of the local inventory for their own use. S & P says that DirecTV, whose new four-year, $4 billion contract for NFL Sunday Ticket is set to begin this season, is also modestly exposed because “lower subscriber acquisition costs would temper the impact of lower revenue growth,” the report said.