Over the last decade, there’s been a lot of talk about the NFL possibly selling off a minority stake in NFL Network and its other media operations (including NFL RedZone, NFL.com, and more). They’ve had talks with Disney, Fox, and NBC at different points, but those have never turned into anything. But the league is again looking to explore this idea, and has retained Goldman Sachs to do so, as per Joe Flint of The Wall Street Journal:
The decision to seek partners is motivated by the league’s belief that its TV and digital holdings will benefit from being aligned with bigger media and technology companies rather than remaining stand-alone operations, league and team officials said.
“As the whole world of communications and digital media changes, we want to find a partner who can further help us maximize the reach and potential the NFL assets represent,” said New England Patriots owner Robert Kraft in an interview. Mr. Kraft is chair of the league’s media committee.
League and team officials stressed that they aren’t looking to sell the networks, and said the NFL will maintain control of them.
“We are not selling. We are looking for investment partners,” said Dallas Cowboys owner Jerry Jones in an interview. Mr. Jones is a member of the league’s media committee and chairman of the owned and operated media committee which includes the NFL Network and RedZone.
John Ourand of Sports Business Journal had a notable tweet on this, discussing his December 2020 prediction of a minority stake sale here, but saying that he now expects a different buyer:
Though I will take credit for a 2021 prediction that NFL Network would be sold this year. My guess in December was that NBC would buy it. My reporting this week suggests that a buyer is more likely to come from outside the broadcast TV sphere. https://t.co/aFyYhoUZPO
— John Ourand (@Ourand_SBJ) June 23, 2021
Here’s more from Ourand’s new piece (with Ben Fischer) on this:
The NFL has hired Goldman Sachs to find a company who will take a stake in the league’s media businesses: NFL Network, NFL RedZone, digital platforms and rights to carry events like the NFL Draft, NFL Combine and the schedule release. The process is expected to last into the upcoming NFL season. “As the media industry continues to evolve, the NFL is exploring a strategic partnership to best position our owned and operated media assets for future growth,” said NFL VP/Communications Alex Riethmiller. “The NFL has a proven track record of creating leading media platforms that develop significant audiences so we anticipate speaking to a number of interested parties.” The Wall Street Journal first reported this development.
It is too early in the process to speculate on how much the NFL’s media business is worth. The league is not saying how big of a stake in the media business that it is selling. NFL Commissioner Roger Goodell said the league’s goal is to find “a partner or multiple partners,” according to a memo sent to league employees this afternoon. “We are not seeking to cede control of the media group, but instead, to take its growth to the next level.” Assets included in this sale are the league-owned L.A. production facility and on-air talent; archived games and video from the NFL Films vault; seven regular season and an undetermined number of preseason games; and the NFL fan database and marketing platform.
What exactly is the value here? Well, the most important parts of this are NFL Network and NFL RedZone. Flint cites an estimate from S&P Global Market Intelligence’s Kagan unit that NFL Network is currently in 56 million homes, with RedZone in somewhat less than that. That’s not bad in the grand scheme of things, and while it’s a long way from the 67,686,000 NFLN had in August 2018 (the last time we saw full Nielsen carriage estimates), all networks have seen some notable losses since then. NFLN’s are higher than many, but 56 million homes isn’t a terrible reach. And RedZone continues to be pretty important, and continues to be carried on a lot of providers. Beyond that, there’s some value to digital platforms like NFL.com and the NFL app. So it’s quite possible to envision companies being interested in this stake, but the question will be how much they’re willing to pay, and how able they are to provide the growth the league is looking for.
If a stake is in fact sold to someone outside the broadcast world, it’s interesting to contemplate who that might be. As all the quotes on this indicate, the NFL isn’t giving up control of these assets, and it seems likely that they’re not just looking for immediate cash. Yes, like many businesses, they’ve faced some pandemic costs and losses, but they’re pretty well off overall. So their claims about looking to sell this stake to someone who can help them expand these assets seem to have some merit. And that fits with what Ourand wrote in December as a prediction: “League owners feel they have grown the 17-year-old network as far as they can by themselves. As part of their rights negotiations, the NFL looks for a strategic partner to invest in the channel. ”
Of course, that prediction specifically had NBC (or rather, parent company Comcast) as the one taking the stake. And a deal with a company that operates another network would make a lot of sense on multiple levels, especially with it being Comcast; in addition to the personnel and content synergies they’d find from pairing up sports networks (also possible with Fox or Disney, and why many of these talks have been with these networks in the past), Comcast has the edge of also being a cable provider (the largest in the U.S.), which adds a lot of help on the distribution front. But if Ourand’s correct that it’s now unlikely to be another broadcaster, that perhaps shifts the focus to a tech company.
A tech company like Amazon, Apple, or Google would certainly bring some value as a strategic partner. All of those companies have their own subscription video operations with Amazon Prime Video, Apple TV+, and YouTube Premium, and there could be a chance to expand the reach of some of the NFL Media content if aligned with one of those services. Google also acts as a digital multichannel video provider with its YouTube TV bundles, which, as of last fall, do carry NFL Network and RedZone (the latter on a SportsPlus tier); alignment with them would help keep those channels there. A partnership with a tech company isn’t necessarily a good thing for a traditional distributor deal, though, as the recent distributor pushback to Sinclair’s plan to offer the Bally Sports RSNs over the top shows.
Outside of tech companies, we’ve already discussed network operators, but something else that might make some sense is a company that’s more of a traditional distributor. Possible options there might include Verizon, Dish/Sling, and Altice. (AT&T seems less likely because their recent deals have been about selling things, not buying, from selling a minority stake of DirecTV to merging WarnerMedia with Discovery.) However, pairing with one distributor helps you with that distributor, but not necessarily with anyone else.
Another option could be a gambling company. The NFL currently has official deals with three companies; DraftKings, FanDuel, and Caesars. It’s possible that one of those companies might be interested in a stake in NFL Media, with that perhaps coming with additional affiliations and content promotion. However, it might be tough to make this work with those previous deals already in place, and it’s not necessarily advantageous for a gambling company to have a direct network stake rather than just an endorsement deal.
There’s also private equity, either on its own or in partnership with one of the aforementioned companies. On its own maybe seems a little unlikely, as it’s not clear how that would really give NFL Media a “strategic” boost. Sales to private equity firms alone are usually about getting immediate cash (as with that DirecTV deal), and while the private equity firm is certainly motivated to increase the value of their stake, there isn’t necessarily much private equity could do that the NFL can’t do on its own. However, it’s certainly possible to envision a deal involving private equity, a tech firm, and/or a broadcaster, similar to how Blackstone, Amazon, and Sinclair all took minority shares in YES when the Yankees bought it back.
At any rate, it’s absolutely possible that this doesn’t end up with a deal being made. As mentioned above, the NFL’s gone down this road at least three times in the last decade, and none of those explorations led to a deal. To get a deal done, they need to find someone not only willing to pay for a stake in these properties (thus, someone who believes they’ll be more valuable in the future), but also someone who has the ability to help make these properties more valuable. That’s not an easy combination, and while there are some suitors who could fit that description, it’s unclear how much interest they have. But it’s certainly notable that the NFL is again exploring this, and that they’ve hired investment bankers to do so. We’ll see what that leads to.