Big Media’s New Owner: The NFL

This month may go down as a landscape-altering month for the National Football League. On Aug. 5, the NFL and Disney announced a major deal, trading the NFL Network, rights to RedZone and other media assets to ESPN in exchange for a 10 percent equity stake in the sports media juggernaut.

A few days later, David Ellison’s Skydance closed its $8 billion deal for Paramount Global, taking control of one of the league’s biggest TV partners … and instantly giving the league an equity stake as well, owing to Skydance Sports joint venture between the league and Skydance.

But arguably the biggest change will come Aug. 21, when ESPN and Fox each launch their new streaming services, and bring their NFL games to streaming outside of the pay-TV bundle for the first time.

It is a shift that is simultaneously subtle (of course they are launching new streaming services) but also earth-shatteringly disruptive.

The NFL is, by an order of magnitude, the most popular programming on TV. By the end of this month, for the first time ever, every single NFL game will be available to consumers streaming online, no pay-TV subscription required. The last holdouts of the pay-TV bundle will have been freed, and the cost to cutting the cord will go down significantly.

But the NFL is also, by an order of magnitude, the most strategic sports league in the world when it comes to getting what it wants, leveraging every ounce of its popularity to do so, as the recent equity stakes help underscore.

While the NFL has been laser-focused on reach and accessibility since its early days (consider that even today, every game, including those on Netflix and Amazon, are still available on broadcast TV, in the local markets of the teams playing), but as the TV landscape has shifted, the NFL’s approach has adjusted accordingly. That’s why Amazon has the Thursday night package, why Netflix has exclusive Christmas Day games, and why this season will see YouTube get a global exclusive from Brazil.

It’s a recognition that TV has been great for the NFL, but it is not enough.

It’s a topic of conversation that surely came up at Allen & Co.’s annual Sun Valley mogul retreat last month, where NFL Commissioner Roger Goodell mingled with the league’s media partners. Sitting down with CNBC on the sidelines o the retreat, with a mountain vista to his back, Goodell explained the NFL’s vision: “Our whole foundation, the core of our media policies, is to reach the broadest audience. So how do we do that? We have to extend beyond our current platforms.”

“What we’re trying to do now is reach the fans where they are,” Goodell added. “I think you see a lot of these new platforms [have] different demographics that are really important for us to be able to reach, and it’s part of our growth strategy.”

Cognizant of cord-cutting and the increasing number of cord-nevers, the NFL wants to make sure its games are available to people who don’t want to drop $100 per month or more for pay-TV.

That’s not to say that NFL fans will save all that much money. ESPN and Fox One alone will cost $39.99 a month in a bundle, and when Prime Video, Netflix, Peacock and Paramount+ are added to the equation, well, the cost savings will quickly evaporate.

But it isn’t about value, it’s about strategy, as the ESPN deal underscores. The league gets equity (and a dividend) from ESPN, and ESPN gets not only additional games, RedZone and other content, but perhaps less easily valued benefits.

“At a high level, we’re bullish on the partnership, as it aligns ESPN with the most important sports league, with attendant benefits we think to future renewals, programming rights, and scheduling,” wrote JPMorgan analyst David Karnovsky on Aug. 6.

Roger Goodell, photographed Aug. 9, 2023 at the NFL’s West Coast headquarters in Inglewood, California, has been NFL commissioner since 2006. Photographed by Shayan Asgharnia

The NFL, meanwhile, also gets something else out of the deal: Four games in its back pocket. While Disney as a whole will get three additional NFL games per season, the NFL can take back four of them, potentially creating an entirely new package (maybe paired with the kickoff game that will be on YouTube this season), that could be sold to a streaming platform, either an exiting partner like Netflix or YouTube, or perhaps a new player (Apple TV+ needs more scale!).

“This finally solves an even longer process of securing a home for its NFL media assets,” a team of MoffettNathanson analysts noted in an Aug. 6 research note. “But we think importantly for a league that plans for the long-term (in decades, not just years), strengthening an existing partner against digital bidders is something of significant value to the league, ensuring there should be continued healthy competition for future NFL rights.”

And the future portends even more dealmaking. The NBA’s blockbuster 11-year, $76 billion media rights deals with NBCUniversal, Amazon and Disney if anything showed how much more value the NFL has to offer, and there are signs the league may take action sooner rather than later.

The NFL’s own 11-year deals with NBCU, Disney, Amazon, Fox and Paramount end in 2032, but the league has an option to exit those deals in 2029. Already there has been chatter that the league could push for new talks even before then, perhaps offering to extend the current deals years into the future in exchange for locking in higher fees.

And Skydance’s takeover of Paramount also started a ticking clock: The league now has a window to force a renegotiation for the CBS NFL rights, an option that the league will need to decide to act on, and one that will provide visibility into the league’s TV future.

“We’ve had a long relationship with CBS for decades,” Goodell told CNBC when pressed on the option, adding that they have two years to decide. “But, you know, we have the option, and that’s something that we’ll take a look at.”

Speaking to reporters on Aug. 7 in Paramount’s New York City headquarters Ellison and his executive team projected confidence that they would remain in business with the NFL, whatever happens to the TV world writ large. Ellison added, “There is no more important partner to us than the NFL, and our viewpoint is, we want to be in business with the NFL for the foreseeable future.”

This story appeared in the Aug. 13 issue of The Hollywood Reporter magazine. Click here to subscribe.

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