Team: B.A.M.F.

NFL AuditJames Corne

Bob EdmistonGeoff Kowalski

Jon Schultz

How does the NFL manage its content portfolio?

• Goal: Quality Product to Max Audience• Saturation, Breakeven, Allocation

• Content NOT Distribution?

How has it Worked?• Value Map & Sources• Silos & Exclusivity• Competition

Where is the NFL?Where are the Teams?

Blackout Coverage Map

History of the NFL

NBC is first network to pick

up the NFL

1939

1959

CBS picks up NFL

1987ESPN is a nobody, picks

up NFL

1994Fox lagging in ratings, buy rights to NFL for

1.8 B.

Where is the NFL?Media Timeline

2006

NFL Network Created

History of the NFLWhere is the NFL?User Paths to Product

Value Map: How The Customer Gets to the NFL

Monetization Strategy: Silo and Exclusivity

$622.5M

$650M

$1.1B

$712.5M

Per Year: 2006-2013

$3.09B

$180M

Per Year: 2009-2012

$1B

Per Year: 2011-2014

How the NFL’s Brand Translates to Revenue for the League

Period AFC Package NFC Package Sunday Night Monday Night Thursday Night Total Amount

1982–1986 NBC CBS None ABC $420 million/yr

1987–1989 NBC CBS ESPN (2nd half) ABC $473 million/yr

1990–1993 NBC CBSTNT (1st half)

ABC $900 million/yr

ESPN (2nd half)

1994–1997 NBC Fox ($395 million/yr)

TNT (1st half)ABC $1.1 billion/yr

ESPN (2nd half)

1998–2005 CBS ($500 million/yr)

Fox ($550 million/yr)

ESPN ($600 million/yr)

ABC ($550 million/yr) ESPN $2.2 billion/yr

2006–2013 CBS ($622.5 million/yr)

Fox ($712.5 million/yr)

NBC ($650 million/yr)

ESPN ($1.1 billion/yr)

NFL Network ($0/yr)

$3.085 billion/yr

Map of Cable Coverage

Rank MSO BasicVideoSubscribers1 Comcast Corporation 22,937,0002 DirecTV 18,934,0003 Dish Network Corporation 14,289,0004 Time Warner Cable, Inc. 12,551,0005 Cox Communications, Inc.1 4,968,0006 Charter Communications, Inc. 4,653,0007 Verizon Communications, Inc. 3,290,0008 Cablevision Systems Corporation 3,043,0009 AT&T, Inc. 2,739,000

The NFL is a Content Producer

Competition

Opportunity Cost

$5M/year

$5/sub$7/month2.3Subs

$3B/yr rvXbox IPTV

History of the NFL

NBC is first network to pick

up the NFL

1939

1959

CBS picks up NFL

1987ESPN is a nobody, picks

up NFL

1994Fox lagging in ratings, buy rights to NFL for

1.8 B.

Where is the NFL?Media Timeline

2006

NFL Network Created

Why has this Worked?• Avoid Costs

• Mitigate Risk- Quality Control

• Extract $ from Winners

Investment & Production Costs?

$ $

$ $

Risk!!!

Personal Conduct Policy

And the Winner Is…

Quality Control

NFL Mobile1999

2005

Text, Email, Web

Video

NFL Mobile

History of the NFL

NBC is first network to pick

up the NFL

1939

1959

CBS picks up NFL

1987ESPN is a nobody, picks

up NFL

1994Fox lagging in ratings, buy rights to NFL for

1.8 B.

Where is the NFL?Media Timeline

2006

NFL Network Created

NFL Mobile

= $720 M/4 years

Will it Continue to Work?• Contract Length

• Tablets• Bring In-house?

Length, Channels & Revenue

82-'86 87-'89 90-'93 94-'97 98-'05 06-'130

1

2

3

4

5

6

7

8

Contract LengthNumber of DistributorsRevenue (Billions)

Website Rank (US Web Traffic)

ESPN.com

22nd

NFL.com 184th MLB.com 291st NBA.com 303rd

Web Traffic Ranking

History of the NFL

NBC is first network to pick

up the NFL

1939

1959

CBS picks up NFL

1987ESPN is a nobody, picks

up NFL

1994Fox lagging in ratings, buy rights to NFL for

1.8 B.

Where is the NFL?Media Timeline

2006

NFL Network Created

• New Silo- Wireless • Exclusive?

• AT&T?

• Wait & See • Emerging or Established?• Develop or License?

• Contract • Length vs. Value

Moving Forward

History of the NFL

NBC is first network to pick

up the NFL

1939

1959

CBS picks up NFL

1987ESPN is a nobody, picks

up NFL

1994Fox lagging in ratings, buy rights to NFL for

1.8 B.

Where is the NFL?Media Timeline

2006

NFL Network Created

Moving Forward into the Future

•GoogleTV? • “wait & see”

• In-house?• Decrease risk?• Cord-Cutting?• Length?• Reversible?

THANK YOU!

QUESTIONS?

NFL vs. Primetime Viewership

Most Watched Shows for Fall TV Season

15 Most Watched Basic Cable Shows of 2010

Key is in the Strategy and Contracts• Strategy: Wait & See, Silo & Exclusivity

– The NFL is in a financial position that they can afford to wait for a clear winner(s) to emerge before signing content distribution contracts

– Puts the NFL in a great position to take advantage of new technology as it becomes established while minimizing their risks and profiting greatly

• Contracts: Length of new contracts will be a very telling signal of the future of the NFL content– Long contracts: Signal that the NFL wants to milk the cash from this

established distribution because it is established and not at risk of disappearing or being disrupted greatly

– Short contracts: Signal that the NFL wants to potentially get in or out of a distribution method

– What kill switches are included on behalf of the NFL?

Contract Lengths and End Dates• TV Contracts:

– CBS, FOX, NBC, and ESPN expire in 2013• Started 2006

– DirecTV expires in 2014– ESPN rumored to be close to a deal to lock up MNF past 2020 – but hasn’t

happened yet• In the news January 2011

• Wireless:– Verizon signed a 4 year deal for 2010-2014

• Will be interesting to see who gets and how long new distribution contracts are for?– Depending on how other distribution channels advance and how quickly they

become mainstream could affect the new deals of the TV networks, if they even get new contracts.

TV is Still Making Money Off the NFL

• Current Profit:– CBS: $146 million– FOX: $107 million– ESPN: $83 million– NBC: $12 million

• However, the question is will this last?– Analysts suggest that it will and that these profits will

actually grow as well – but analysts have been wrong before• All depends on companies being willing to spend huge

$$$$$ on advertisements

Bring Content Distribution In-House

• US Pop: 307 million• NFL Revenue: $9.4 billion• Revenue from Networks: approx. $4 billion• 2010 regular season reached 207.7 million unique viewers• NFL games were watched by an average of 17.9 million

viewers• $3 billion/207.7 million = $14.44• Leave ESPN the most profitable contract in place for MNF

- $1.1 billion per year• $1.9 billion/ (207.7 million – 17.9 million) = $10.01