NFL Network Musings

A couple people were late showing up last night, so we paused the game at the start and caught up during the commercials.  I noticed early on that during a couple breaks I only had to hit the 30-second skip button three times before getting back to the broadcast.  I don't know the length of an average NFL commercial break on the other networks, but that seems really short.  When you factor in how many of the commercial slots last night were for the NFL itself as well as the cost of what was admittedly a very nice presentation, I wonder if the League is actually making money on this whole venture?

As I did some Googling to try to figure out how many commercials are in a normal telecast, I came across this interesting link.  You think I'm obsessive with the game tracking stuff, look at that breakdown of every single commercial during last year's Colts/Chiefs playoff game on NBC.  It's amazing how many of the commercials/plugs on the network are for the network. 

And yet it seems to me that there's a big difference in the value to NBC of 15-second spot plugging Bionic Woman and the value to the NFLN of a 15-second spot plugging NFL Total Access.  Clearly I'm just spit-balling here, but if the NBC promo works, it's going to convince a viewer watching one highly-rated program to watch another highly-rated program during the time of day that advertisers most want to pay for commercials.  If the NFLN promo works, the end result is moving a viewer over to a low-rated program with little ad revenue.  (If TV ad rates are linear, this wouldn't matter as much, but I think there's a "premium pricing" issue there.) 

The second problem is that there isn't that much to watch on the NFLN, which means we get 15 promos for the same show.  If NBC shows three promos each for five different shows, there's a chance one will grab my eye.  There has to be a diminishing marginal return issue for repeatedly hyping NFL Total Access. 

On the other hand, as I understand this stuff (which isn't at all well), NBC is a fully advertising-funded operation.  Revenues are almost 100 percent dependent upon the number of eyeballs watching each program, because that determines ad rates. 

In contrast, the NFLN has two sources of income.  Advertising is a piece, but so is the subscriber fee it charges to the cable and satellite operators, currently about $.70 / person / month.  If the figure in this piece is correct, the NFLN has about 35 million subscribers.  That would make subscription revenue about $300 million a year. 

Here's a good explanation of how that works for ESPN, another rights-fee supported operation:

ESPN collects as much as $3.25 a subscriber in monthly affiliate fees, the highest in cable, compared with about $2 for News Corp.'s Fox Sports, the media researcher Paul Kagan said. The fees make up roughly two-thirds of ESPN's revenue, and rose 10 percent to 20 percent annually before the recent contracts, he estimated.

Now ESPN has a huge TV / web / print operation that's been developed over the course of many years, while the NFLN is just getting off the ground.  My guess would be that subscription fees make up a much higher percentage of total NFLN revenues.  So if the ads the NFLN shows succeed in increasing ratings across the board, maybe that drives up average ratings and increases the potential subscriber fee?

I don't know, the whole thing's rather interesting.  If you know anything about this stuff, I'd love to hear about it.