The NFL brings Some Sanity to Rights Licensing

Last week, the NFL sent out its formal requests for proposals to the companies it expects to bid for the rights to broadcast its Thursday night games over the next two years. Though the new approach it’s taking isn’t perfect, it brings some much-needed sanity to the rights licensing process and there are elements here other content owners should be watching closely.

The NFL’s complex rights system

The NFL’s rights packages are the most lucrative in US television, selling for more than any other sports packages, but they’re also fairly complex. Over the years, the NFL has split the rights into several discrete chunks, with Sunday, Monday, and Thursday night games, along with playoff games subject to different contracts and owned by different companies. Three of the four major broadcasters share many of the rights, with ESPN owning the rest, while the NFL’s own NFL Network gets in on the action too. These rights expire at different times, with almost all of them currently locked up through 2021 or 2022, but the Thursday night games have been sold on a shorter-term basis and are up for bid in January.

Audience size a major guiding principle

One of the most interesting aspects of the NFL’s approach to selling its rights is it’s never been motivated just by getting the highest possible price for the team owners who receive much of the proceeds. Rather, as described by NFL Network CEO Brian Rolapp on a recent episode of the Re/code Decode podcast, the major guiding principle has been getting the biggest possible audience. This is the key reason why all the rights haven’t simply been sold to various cable networks over the years, which likely would have netted higher fees than licensing to the broadcast networks.

Given how much rights have been fragmented in recent years, with various players lobbying for exclusive content, which in turn means large portions of the overall audience don’t get access to the content, this commitment to achieving the broadest possible audience is admirable, especially if it’s really true this means they forgo some revenue as a result.

Approaching digital as an “and” rather than an “or”

The last time rights for the Thursday night games were sold, Yahoo purchased the right to broadcast one of the games as a digital exclusive. This was arguably something of an experiment for both Yahoo and the NFL and one that arguably didn’t go so well for Yahoo. However, it’s increasingly clear digital players want to broadcast at least some of these games and there have been frustrating barriers to their ability to do so because of some of the current rights contracts. The best example of this is Verizon Wireless’ exclusive right to broadcast games to mobile phones, which means that even TV packages which offer mobile apps are unable to show those games on mobile devices, even if other content streams fine.

Based on the article I linked at the beginning of this piece, it seems the NFL is taking a more inclusive and less exclusive approach to digital rights than it has to mobile rights in the new contracts. The digital rights are being sold off as additional options rather than alternatives to the broadcast rights. In other words, companies like Apple, Google, or Amazon could acquire digital rights without removing those same games from broadcast schedules. This would prevent some of the fragmentation and frustration associated with some of the past contracts, and also with increasingly exclusive content rights in general.


A reflection of the way the world works now

These changes mean the NFL’s new approach to rights is remarkably sane and more reflective of the way the world works now. Whereas Verizon Wireless once acquired those exclusive mobile rights in a world where mobile content services were still a thing, the world we live in today is filled with content services that are platform-agnostic. Netflix, Hulu, TV Everywhere solutions and more, all operate across devices in a relatively seamless fashion. In addition, most customers aren’t going to sign up for every video service under the sun, such that exclusives break the traditional model of being able to buy a single package that would give the customer access to all the relevant content. The NFL’s new approach promises to reflect this reality better than its past processes have and could also serve as an example for other content owners going forward. Here’s hoping they pay attention.

Published by

Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

3 thoughts on “The NFL brings Some Sanity to Rights Licensing”

  1. “The digital rights are being sold off as additional options rather than alternatives to the broadcast rights”

    Great news for cord cutters. That’s been my biggest frustration with MLB. I don’t do cable and the Braves cut all local OTA broadcasts. I can’t even use MLB Live, or whatever it is called, to watch online because I live in Atlanta. It was easier to be a Braves fan when I travel than when I stay home. Now I just don’t care. They don’t want me as a fan, I don’t have to be one.

    “Three of the four major broadcasters share many of the rights”.

    That’s interesting. Probably for the same reason not every major city has a football team and likely never will. Got to have some out for negotiations.


Leave a Reply

Your email address will not be published. Required fields are marked *