With the English Premier League rights locked with NBC through the 2021-2022 season, it means that once again, a network has ponied up for live sports content. The New York Times’ Richard Sandomir reports that NBC Sports Group paid in the neighborhood of $1 billion to keep the EPL in the fold. For the current contract that expires this season, NBC pays $250 million. This means that NBC will double its annual rights fee payments to the EPL.
With viewership averaging 479,000 viewers per game last season which increased 9% from the year before, NBC feels the investment was worth it. In a media conference call, NBC Sports Group Chairman Mark Lazarus admitted the two deals with the EPL don’t make money:
“We look at it for what it does for our portfolio from all our revenue streams: advertising, affiliate deals, digital monetization. It’s hard to break out what comes from E.P.L. or hockey or Nascar. It’s in the total offering. This isn’t a deal that’s profitable, but we believe it adds to the profitability of our business.”
And it also keeps a property away from ESPN and Fox.
We’ve discussed how the increasing rights fees have put a drain on the networks’ bottom lines. How this new contract will affect NBC will be seen in the coming years. But as we told you before, sports rights aren’t going down. We remind you how the fees have increased for the major sports leagues.
TV rights increases on new deals: NBA +186%, NHL +167%, MLB +105%, NFL +64%.
— Darren Rovell (@darrenrovell) October 6, 2014
And with another huge spike for the English Premier League, it brings the increase in line with the other properties. For Lazarus, it means that NBC will have to make its money back and in locking out the EPL from other networks, it means the Peacock can find ways to monetize its contract:
“This is, in a way, similar to the Olympics. No matter what technologies get invented between now and over the next seven years, we paid for the right to try to monetize this product against whatever form of viewership consumers are using. And that gives us great comfort in buying rights.
“And the other aspects of it, and you live with it in Houston with regional sports networks; there is no regional sports network. There’s really just the national broadcast. So, the exclusivity, we think, has heightened value.”
And it could mean a subscription model down the road:
“I don’t rule anything out. Seven years in media terms is a long time. We wanted to be upfront in our release that as media evolves, we will be in a position to evolve with it and that’s what this complete set of rights allows us.
For right now, we are going to approach it the exact same way we have for the last two seasons.”
NBC sees the value of the English Premier League as a tent pole for the network. With 380 live games airing over a span of nine months, the matches fill programming holes on weekends and on occasional weekdays where informercials or outdoor shows would air.
And as NBC has made the EPL into valuable programming as compared to when ESPN and Fox had the games, it shows that once you make a property into must see TV, you’ll have to pay the piper and Lazarus realizes that:
“You know, when we made our bid three years ago, we said to (EPL Chairman) Richard (Scudamore), you know, if we are successful, we know we are going to have to pay more money to retain these rights. That has happened. That has happened, and we are proud that it was successful in growing the league, because we have grown and benefitted, as well.”
So as we look to the Big Ten as the next big sports property going out to bid, we know that ESPN, Fox and NBC will be interested suitors. The league will be the next to cash in. It also means that networks will once again have to depend on their numbers crunchers to see how they can monetize the contract and if it will put more strain on the bottom line.
