After the NFL announced the $ 100 billion rights deal on Thursday, Wall Street analysts agreed that the league was the big winner. Nevertheless, you can see that some rights holders can score points despite the high price.
Disney in particular became aware that it had the lowest increase from the previous to the new deal and also secured exclusive streaming and Super Bowl rights. Monday night football will also be able to “bend” more desirable games into its schedule, unlike in the past.
While the scenario of ESPN leaving the traditional streaming ecosystem has been circulating for a while – and the company insists it’s premature – the new deal could lay a foundation for it. The NFL deals stretch through 2033, which means consumer behavior and industry dynamics will continue to evolve. No radical shifts are expected right away with ESPN, but analysts agree that the traditional bundle will shrink dramatically, putting even more pressure on distribution fees. Robert Kraft, owner of the New England Patriots and chairman of the NFL, said, “Streaming really is the future.”
Shares of major stakeholders like Amazon, Comcast, Disney, Fox, and ViacomCBS don’t move much while investors process the news. The stocks are unchanged up to 1% during a fairly quiet trading session. In a series of research notes approaching the weekend, the analysts rounded up the pros and cons, with cable cutting a main topic.
Amazon claimed rights Thursday night football, the first time a streaming service has an exclusive piece of the NFL pie. Deals have a strong linear TV component, however. On Sundays, for example both in the afternoon and in prime time, CBS, Fox and NBC continue to be preferred. Only streaming games are scheduled for NBCU’s Peacock and ESPN + each season.
Michael Nathanson of MoffettNathanson pointed out that Fox and Disney “are unlikely to blow up their models and instead use those rights to get higher increases per subrate”. However, this strategy could be tricky when companies need to negotiate car renewals with MVPDs.
“Over time, this approach could likely speed up cable cutting, which will force Disney and Fox to make more difficult decisions,” he wrote. “Is ESPN + finally developing linearly from ESPN? Will Fox decide to sell its digital rights to a third party streaming service? “
He adds that there is a new way for cable cutters to create their own NFL package. “A consumer could easily cut cables for more than five months of the NFL season and stream games on Thursday, Sunday, and Sunday evenings for less than $ 15 a month,” notes Nathanson.
Guggenheim’s Michael Morris pointed out that Disney “saw the largest expansion of rights, with what we estimate to be the most modest increase in costs.” This gives the company some maneuverability in migrating viewers from linear to streaming, which has been a key priority in recent years. Agreeing with Nathanson, “Disney appears to be the only company that can claim it was able to get more value from its new business than from its old business.” He added, “Aside from the NFL, Disney was the only other winner on this new deal.”
Morgan Stanley’s Ben Swinburne said one of the main benefits for Disney is the ability to simultaneously stream NFL games on ESPN + and have some exclusives there too. It could also stream games “in a full DTC version of ESPN” as part of the deal, should it choose to set that strategic fulcrum, “he wrote.
Lightshed Partners’ Rich Greenfield (which, unlike investment banks, analyzes stocks but doesn’t trade) has not announced any upcoming changes for Disney. But he long predicted the demise of pay TV and has often tagged his Twitter posts with the hashtag #goodluckbundle. In a blog post, he said the NFL renewals will only accelerate the trend.
“Check it out,” wrote Greenfield. “March 18, 2021 is the day the multi-channel TV package died. Sure, the bundle will last for many years to come, but future developments are clearer now than ever and the proverbial “floor” for multi-channel video subscribers is far lower than predicted. What we thought was 40-50 million subscribers because of the NFL is now likely closer to 20 million as more marquee sports content (especially NFL content) becomes available outside of the old multi-channel bundle. “
Swinburne repeated this feeling in his note. “From House of cards to Monday night footballNow there is no turning back, ”he wrote. “Overall, the NFL believes we have taken the path we saw first in script television, then in original movies, followed by kids and non-written content, and increasingly in news and sports. Essentially, the industry is devaluing the linear bundle and aggressively investing in individual streaming services. This has resulted in an increased level of cable cutting, but a rapid uptake when streaming. How will this end? “
Even for rights holders who aren’t specifically invested in direct-to-consumer streaming, at least not for subscriptions, there are many benefits, according to some analysts. According to Tuna Amobi of CFRA Research, Fox in particular can benefit from using the NFL to fund its sports betting ambitions. “While Fox’s estimated annual price of over $ 2 billion a year appears to have nearly doubled from the last NFL deal,” he wrote, “we are seeing a landmark deal that will be critical to its burgeoning gaming business could prove and further consolidate his long business. ” -term sports rights amid continued audience fragmentation and escalating streaming wars. “
Fox, which gives in to Amazon on Thursdays, could also choose to sell its digital rights to a third-party streamer. The company acquired the ad-supported streaming service Tubi last year and will add NFL programming as well as what Fox calls “Condensed Games”.