NFL Lockout Could Mean Major Losses for Networks

Networks stand to lose more than $3 billion in advertising, report says

The NFL labor situation and impending lockout could have a major financial impact for cable and broadcast networks, especially if the season has a reduced number of games, according to the Wall Street Journal.

One of the largest effects a loss of games would have is in advertising, where the networks stand to lose more than $3 billion. The networks still have a few months however, until those dollars begin to shrink. Most marketers do not commit to advertising until April or May, when the networks begin to sell spots.

Companies, including CBS Corp, argue that a work stoppage would not have an immediate affect on the profitability of an NFL Broadcast. The leagues broadcast and cable partners expect pay an estimated $4.2 billion in license fees this year, which they have not paid yet. Due to the astronomically high amount, many of the networks do not make a substantial profit, some even take a loss. If the season is cancelled, networks would still have to make payments, but would earn credits for future years.

DirecTV is the partner with the most to lose, due to its NFL Sunday Ticket package. A lost season could see DirecTV lose 10%-20% of its subscribers, according to analysts.

The NFL's labor situation comes at a time when popularity is at an all-time high. For the second straight year, the Super Bowl broke records to be the most watched telecast the U.S. history with 111 million viewers.-- Tim Baysinger