NFL Set for Big Score Powered By Retrans

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Looks like TV networks are ready to write much bigger checks to the National Football League, the source of the industry’s highest-rated programming.

According to Sports Business Journal, Fox, CBS and NBC are close to renewing their NFL deals with rights fee increases coming in at about 60%, making each network’s payment more than $1 billion a year.

Where will all that money come from?

As we wrote in a cover story in October, the bulk of it comes from the retransmission consent agreements broadcasters are signing with cable operators. The new retrans agreements call for cash payments worth hundreds of millions of dollars a year. And since NFL programming is a big reason why the broadcasters can push the cable operators for bigger payments, it’s only fair that the league feels justified in intercepting cash that had been destined for the networks’ own bottom lines.

That means, in essence, the networks will be signing over their retrans checks they’re getting from cable operators to the NFL. For example, the $600 million CBS expects to be collecting in retrans and reverse comp from affiliates in a few years will just about cover football inflation.

It remains to be seen if the networks can make a profit on these new NFL deals. While the networks publicly maintain that pro football is not a loss leader, TV execs say that you have to include an awful lot of indirect revenue to avoid hundreds of millions of red ink.

But what choice do they have? For NBC, Sunday Night Football is keeping prime time from averaging cable-like numbers. And both Fox and CBS have seen life without football and neither wants to go back.

The SBJ article said that the new deals will again be eight years long. Over their course, the NFL will take in about $24 billion. The agreements are expected to be finalized this month, the paper says.

ESPN in September agreed to a new $15 billion deal with the NFL covering Monday Night Football and another 500 hours of NFL programming.

ESPN paid a 73% increase. It is already the network that costs cable operators the most money in monthly license fees per subscriber.

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