NFL Viewing in ‘Structural Decline,’ Analyst Says

Ratings drop could impact bidding for Thursday night package

With the Super Bowl approaching, one Wall Street analyst is wondering what this season’s drop in ratings will mean for the National Football League and the television networks that depend on it for must-see programming.

Michael Nathanson of MoffettNathanson Research, who predicted NFL ratings would bounce back this season, now says “the NFL is experiencing a structural decline in viewership.”

Related: Spending on NFL Game Ads Dropped 1.2% During Season

The number of gross ratings points (GRPs) for regular season NFL games was down another 13% in 2017. That’s important for the the TV business.

“That’s where the money is,” Nathanson said in a report Monday. Between games and shoulder programming NFL football accounts for 46% of Fox’s GRPs, or 40% excluding the 2017 Super Bowl. It represents 15% of ESPN’s GRPs, and 12% for both NBC and CBS.

Spot in NFL games generate more money than other programming. According to Standard Media Index, NFL prices for NFL spots topped $500,000 per 30 seconds during the 2017 season.

Nathanson expects the sustained ratings decline to impact NFL rights fees, starting with the current negotiation over the Thursday Night Football package, which was shared this past season by CBS and NBC.

In the past year, Thursday Night Football did not appear too profitable for CBS and NBC said Nathanson, who estimates each network last about $30 million per game. Each network broadcast five games, making each network’s total loss about $150 million.

“Consequently it is not surprising to hear that both CBS and NBC submitted lower bids for the new TNF package,” said Nathanson, citing figures from a report in Sports Business Journal. “Fox is reported to have submitted a higher bid, perhaps as a signal to the market that they are still play player for sports rights despite their potentially smaller scale after the Disney deal.”

Fox parent 21st Century Fox has agreed to sell cable network and studio assets to Disney.

In terms of digital players, Nathanson notes that Facebook did not bid for TNF streaming rights. Amazon and Twitter did bid but streaming has accounted for only 2.5% of NFL consumption the past two seasons, making the NFL unlikely to consider an over-the-top option for an exclusive game package.

“We think the continued weakness of the NFL could pose a long-term risk for broadcasters who may be forced  to bid-up the rights if ESPN chooses to move to a Sunday night game and pushes NBC into the Sunday day package bidding,” Nathanson said. “At the same time, the NFL will need to encourage digital bidders to enter the auctions to drive up prices, but may be uncomfortable with the low ratings produced by Twitter and Amazon during these early experiments. The one thing we know is that 2016’s weakness was not an anomaly.”