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The Pay TV Model Is Declining. The N.F.L. Is Still Banking on It.

In their agreements with the league, networks promoted their digital rights. But the structure of the deals allows consumers to watch most games without subscribing to a streaming service.

The biggest conglomerates in television collectively agreed to spend more than $100 billion to continue putting N.F.L. games on their broadcast and cable television channels for the next decade, but the way they announced the deals on Thursday did not make that immediately apparent.

ViacomCBS wrote in the headline of its news release that it had signed a “multiplatform” agreement. ESPN, in the second bullet of its news release, declared that “more exclusive national ESPN+ content” would be coming, while the second sentence in Fox’s release pointed out that the digital rights were going to Tubi, a little-watched streaming service it owns.

Such is the difficulty in purchasing the rights to show live sports in 2021. Streaming is the present of movies and TV series and the future of sports, and growth in that sector is what is currently rewarded by Wall Street. But the number of people who pay to stream sports, and the amounts they pay, are dwarfed by the tens of millions of American households that still spend $50, $100 or even $150 each month for a television package.

The agreements cement the N.F.L.’s status as the richest sports league in the world and once again demonstrate that its programming is the keystone that keeps the crumbling traditional television ecosystem from falling apart completely. In 2020, 76 of the 100 most-watched television programs were N.F.L. games.

“I think the N.F.L. did a spectacular job getting $100 billion plus,” said John Skipper, the chief executive of Meadowlark Media, who negotiated with the N.F.L. while running ESPN. “I think they understood that we are in a moment of transition from a world of cable and broadcast television to streaming services. They understood that there is still enough money in a declining pay TV broadcast universe.”

The agreements, which will begin in 2023 and which mostly run through the 2033 season, fundamentally look quite similar to the last set of media agreements the N.F.L. signed in the early 2010s. Sunday afternoon games will remain on Fox and CBS, Sunday night games will remain on NBC, and Monday night games will remain on ESPN. The biggest difference is that 15 games on Thursday nights will be shown only on Amazon’s Prime Video streaming service.

While front and center in the news releases, streaming really exists around the edges of the N.F.L.’s future. ESPN, CBS and NBC all announced that N.F.L. games would appear on their streaming services, but in almost all cases, those will be simulcasts of what is being shown on their television channels. Just a single game each season will appear exclusively on ESPN’s and NBC’s streaming services outside the home markets of the teams that are playing. None will appear on CBS’s or Fox’s services.

That means that if you pay for a television package, as more than 80 million American households still do — though that is down from over 100 million in 2011 — and if you pay for Amazon Prime, which more than 126 million Americans do, you can continue to watch the vast majority of N.F.L. games, including the Super Bowl and every playoff game, without paying for a streaming service.

“While digital is growing, the traditional TV ecosystem is still incredibly rich, incredibly deep, incredibly broad,” said Hans Schroeder, the chief operating officer of the N.F.L.

In the 2000s, as sports leagues began agreeing to media deals that placed games on cable television, N.F.L. games remained almost entirely on broadcast television. In the 2020s, as most games are on cable and sports leagues begin agreeing to media deals that place games on streaming services, N.F.L. games still remain almost entirely on broadcast television.

Amazon Prime Video will be the exclusive home of 15 games on Thursday nights each year.
Jennifer Stewart/Associated Press

There is usually an inverse relationship between how popular a sport or a league is and how many of its games are shown on streaming platforms. Events and games in niche sports are carried almost entirely on streaming services, while considerably fewer college football and N.B.A. games are. Even in that hierarchy, the N.F.L. is distinctly powerful.

But a decade is a long time, and given how quickly the media ecosystem is changing, even the most confident television executives do not know what will happen in four years, let alone 11.

“The key is to protect the multiplatform aspects of this deal,” said Sean McManus, the chairman of CBS Sports. “So that if it turns out that streaming is the No. 1 growth element in the deal, we have those rights, and we have the broadcast rights.”

The incumbent media companies paid dearly to maintain those broadcast rights while slowly building up their streaming services.

Broadcast television stations, like those affiliated with ABC, CBS, NBC and Fox, receive money through retransmission consent fees from pay television providers like Comcast or Charter. Pay television providers must get consent to retransmit the signals of those broadcast channels, for which they usually pay a lucrative fee, and having N.F.L. games will give those stations extra leverage to ask for more money.

But the fact that many N.F.L. games are available on streaming services could backfire for the broadcast stations. Consumers could have an incentive to get rid of their expensive pay television packages, adopting cheaper streaming alternatives. If too many make the switch too fast — paying just $5 a month for NBCUniversal’s streaming service, Peacock, instead of paying for NBC, USA, Bravo and other NBCUniversal channels through a pay TV package, for instance — the cheaper streaming services won’t generate enough revenue to help their parent companies pay billions of dollars to the N.F.L. each year.

CBS, Fox and NBC will each pay the N.F.L. more than $2 billion a year, on average, about double what they paid under the old agreements, according to four people familiar with the agreements who requested anonymity because they were not authorized by the N.F.L. to speak publicly about the deals. ESPN will pay about $2.7 billion a year, on average, up from $2 billion.

But while ESPN will pay more than its competitors, the 35 percent increase in price is far lower, proportionally, than the roughly 100 percent increase CBS, Fox and NBC face. ESPN will also get a lot more for its money. It will enter the Super Bowl rotation, with its sister channel ABC — both are owned by the Walt Disney Company — showing the Super Bowl every four years, beginning with the 2027 game. ESPN will also show 23 regular-season games each year, up from 17, adding more Monday games on ABC and a Saturday doubleheader on ESPN.

The N.F.L. experimented in recent years with selling streaming rights to a handful of digital companies, including Amazon, Twitter and Yahoo, while Facebook and YouTube have signed deals to show other sports. But almost all of those games shown were seen by only a fraction of the normal audience.

That has led to a handful of competing explanations, such as that the viewership was small because the games were also shown on television or because people did not want to watch sports on streaming services. But it is mostly because none of the technology giants, who stomp through other realms of the economy without a second thought, have been willing to spend a significant sum of money to find out what will happen if really popular sporting events are shown exclusively on a streaming platform.

Except for Amazon. The company will pay an average of $1 billion, according to two of the people familiar with the agreements, in each of the next 10 years to be the only place to watch 15 Thursday night games each season, by far the largest sum of money any technology company has ever paid to show sports. If Amazon can prove that showing football games leads to a significant increase in Amazon Prime subscribers, or benefits Amazon’s other business lines, perhaps Netflix, Alphabet and Facebook will follow its lead and dive into sports.

Meanwhile, the N.F.L.’s media agreements will be an anomaly. Expect the future of sports media to look much more like the agreement the N.H.L. recently signed with ESPN, where the playoffs and marquee games will be on traditional television, but a large number of regular-season games will be exclusive to ESPN+ and Hulu.

Or just listen to Pete Bevacqua, the chairman of the NBC Sports Group.

“From our sports strategy perspective,” he said, “every rights deal we are considering or studying, one of the first questions we ask ourselves is, ‘OK, what would be the right play for this on Peacock?’ That is part of every conversation we have now in our sports group.”

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