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Amazon, Fox, & Others Are All In On the NFL: Is the League Doomed?
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The 2018 NFL season begins Thursday, September 6 on NBC (CMCSA - Free Report) , which marks the start of a roughly five-month stretch that will see football take center stage. Yet, the NFL and America’s favorite sport are seemingly at a crossroads, marred by controversy and declining ratings. But are things really that bad for the NFL and its business partners?
The Controversy
The NFL is set to enter the third straight season in which national anthem protests will draw headlines and pit people against one another, fueled, in part, by a political divide. This issue isn’t likely to be resolved before the season starts even though the NFL Players Association and the league have tried to negotiate a resolution. ESPN (DIS - Free Report) , which has struggled amid the age of cord-cutting, won’t even broadcast the national anthem before Monday Night Football in an effort to sidestep the issue altogether.
On top of that, the NFL and football face near constant critiques about the inherent violence of the game. The league has implemented new helmet rules this season to try to make the game safer, but many players, as well as fans, have already voiced their objections to it—some NFL players even sported “Make football violent again” hats during the preseason.
Despite the NFL facing multiple no-win situations, its business is still thriving—relatively.
TV Deals
The NFL is currently in the midst of multiple television contracts, nearly all of which run through the 2021 or 2022 season. NBC, CBS , and FOX (FOXA - Free Report) pay a combined $27.9 billion over a nine-year deal that expires at the end of the 2022 season. Meanwhile, ESPN’s eight-year, $15.2 billion Monday Night Football deal ends after 2021. DirecTV is also on an eight-year, $12 billion deal for its NFL Sunday Ticket package.
And it’s not over yet, Fox signed this past offseason a separate five-year, $3.3 billion deal for Thursday Night Football rights. TNF will also once again be streamed on Amazon (AMZN - Free Report) Prime after the e-commerce powerhouse signed a new two-year rights deal. Investors should note that Amazon reportedly beat out the likes of Facebook and Twitter —Twitter was the first big tech player to land these same TNF rights in 2016.
The narrative is that the NFL’s slumping ratings will scare media companies away, yet Fox practically doubled down on its NFL bet and tech giants—albeit a few filthy rich ones—were eager to sit down at the NFL’s table as well. So are these companies and their top executives that misguided, or is the NFL simply one of the last TV products worth buying?
Ratings
The strange thing about the NFL ratings story is that both sides of the aisle often toss them around to support their point. One thing, however, remains nearly constant: the NFL’s ratings are down and the league is doomed. There is some truth in these claims, but not as much as the casual glance might suggest.
The NFL’s regular season ratings were down 8% in 2016, with the average game grabbing 16.5 million viewers compared to 2015’s 17.9 million. Last season, the average regular season TV audience hit 14.9 million, which marked a 9% slip. These are eye-catching numbers and are in no way good for the long-term health of the NFL. Yet, isolated from comparison, numbers rarely present the full story.
As a whole, in the coveted 18-45 demographic, broadcast TV networks lost 16% of their viewers, while cable networks saw an 11% decline. NBC and CBS’ overall ratings sunk 19%. Meanwhile, AMC’s ratings fell 20%, alongside Lifetime’s 21% and Comedy Central and E! network’s 18% drop-offs.
The rise of Netflix (NFLX - Free Report) , Amazon, and Hulu, coupled with the overall changing media landscape, has helped linear television start to nosedive. With that said, the NFL and live sports remain one of the only hopes for TV and advertisers. In fact, NBC’s Sunday Night Football remained the highest-rated show on TV for the 7th straight season. SNF’s impressive streak surpassed American Idol for the longest hold on the top prime-time spot since 1950.
Looking Forward
The NFL has a lot of issues to work through, and the overall health of the sport of football might prove to be the biggest long-term problem for its longevity. Still, the NFL dished out $8.16 billion in national revenue that was split among the league's 32 teams last season, which was a record and marked a nearly 5% jump from 2016.
Advertisers will stick around as they find it increasingly difficult to reach consumers who are glued to subscription-based services from Netflix to Spotify SPOT. And the reason is simple: sports are some of the only programming people can’t watch on demand.
Therefore, whether it’s on Facebook Watch, YouTube TV (GOOGL - Free Report) , or some service that isn’t around yet, the NFL is sure to be a product that businesses want to be a part of. Nike (NKE - Free Report) , PepsiCo (PEP - Free Report) , Microsoft (MSFT - Free Report) , and other giants have stuck by the league—and let’s not forget the positive impact that the likely proliferation of legal sports betting could have on the NFL.
Best Electric Car Stock? You'll Never Guess It.
Zacks Research has released a report that may shock many investors. One stock stands out as the best way to invest in the surge to electric cars. And it's not the one you may think!
Much like petroleum 150 years ago, lithium battery power is set to shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, revenues that were already at $31 billion in 2016 are expected to blast to over $67 billion by the end of 2022.
Image: Bigstock
Amazon, Fox, & Others Are All In On the NFL: Is the League Doomed?
The 2018 NFL season begins Thursday, September 6 on NBC (CMCSA - Free Report) , which marks the start of a roughly five-month stretch that will see football take center stage. Yet, the NFL and America’s favorite sport are seemingly at a crossroads, marred by controversy and declining ratings. But are things really that bad for the NFL and its business partners?
The Controversy
The NFL is set to enter the third straight season in which national anthem protests will draw headlines and pit people against one another, fueled, in part, by a political divide. This issue isn’t likely to be resolved before the season starts even though the NFL Players Association and the league have tried to negotiate a resolution. ESPN (DIS - Free Report) , which has struggled amid the age of cord-cutting, won’t even broadcast the national anthem before Monday Night Football in an effort to sidestep the issue altogether.
On top of that, the NFL and football face near constant critiques about the inherent violence of the game. The league has implemented new helmet rules this season to try to make the game safer, but many players, as well as fans, have already voiced their objections to it—some NFL players even sported “Make football violent again” hats during the preseason.
Despite the NFL facing multiple no-win situations, its business is still thriving—relatively.
TV Deals
The NFL is currently in the midst of multiple television contracts, nearly all of which run through the 2021 or 2022 season. NBC, CBS , and FOX (FOXA - Free Report) pay a combined $27.9 billion over a nine-year deal that expires at the end of the 2022 season. Meanwhile, ESPN’s eight-year, $15.2 billion Monday Night Football deal ends after 2021. DirecTV is also on an eight-year, $12 billion deal for its NFL Sunday Ticket package.
And it’s not over yet, Fox signed this past offseason a separate five-year, $3.3 billion deal for Thursday Night Football rights. TNF will also once again be streamed on Amazon (AMZN - Free Report) Prime after the e-commerce powerhouse signed a new two-year rights deal. Investors should note that Amazon reportedly beat out the likes of Facebook and Twitter —Twitter was the first big tech player to land these same TNF rights in 2016.
The narrative is that the NFL’s slumping ratings will scare media companies away, yet Fox practically doubled down on its NFL bet and tech giants—albeit a few filthy rich ones—were eager to sit down at the NFL’s table as well. So are these companies and their top executives that misguided, or is the NFL simply one of the last TV products worth buying?
Ratings
The strange thing about the NFL ratings story is that both sides of the aisle often toss them around to support their point. One thing, however, remains nearly constant: the NFL’s ratings are down and the league is doomed. There is some truth in these claims, but not as much as the casual glance might suggest.
The NFL’s regular season ratings were down 8% in 2016, with the average game grabbing 16.5 million viewers compared to 2015’s 17.9 million. Last season, the average regular season TV audience hit 14.9 million, which marked a 9% slip. These are eye-catching numbers and are in no way good for the long-term health of the NFL. Yet, isolated from comparison, numbers rarely present the full story.
As a whole, in the coveted 18-45 demographic, broadcast TV networks lost 16% of their viewers, while cable networks saw an 11% decline. NBC and CBS’ overall ratings sunk 19%. Meanwhile, AMC’s ratings fell 20%, alongside Lifetime’s 21% and Comedy Central and E! network’s 18% drop-offs.
The rise of Netflix (NFLX - Free Report) , Amazon, and Hulu, coupled with the overall changing media landscape, has helped linear television start to nosedive. With that said, the NFL and live sports remain one of the only hopes for TV and advertisers. In fact, NBC’s Sunday Night Football remained the highest-rated show on TV for the 7th straight season. SNF’s impressive streak surpassed American Idol for the longest hold on the top prime-time spot since 1950.
Looking Forward
The NFL has a lot of issues to work through, and the overall health of the sport of football might prove to be the biggest long-term problem for its longevity. Still, the NFL dished out $8.16 billion in national revenue that was split among the league's 32 teams last season, which was a record and marked a nearly 5% jump from 2016.
Advertisers will stick around as they find it increasingly difficult to reach consumers who are glued to subscription-based services from Netflix to Spotify SPOT. And the reason is simple: sports are some of the only programming people can’t watch on demand.
Therefore, whether it’s on Facebook Watch, YouTube TV (GOOGL - Free Report) , or some service that isn’t around yet, the NFL is sure to be a product that businesses want to be a part of. Nike (NKE - Free Report) , PepsiCo (PEP - Free Report) , Microsoft (MSFT - Free Report) , and other giants have stuck by the league—and let’s not forget the positive impact that the likely proliferation of legal sports betting could have on the NFL.
Best Electric Car Stock? You'll Never Guess It.
Zacks Research has released a report that may shock many investors. One stock stands out as the best way to invest in the surge to electric cars. And it's not the one you may think!
Much like petroleum 150 years ago, lithium battery power is set to shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, revenues that were already at $31 billion in 2016 are expected to blast to over $67 billion by the end of 2022.
See Zacks Best EV Stock Free >>