Barclays Capital analyst Anthony DiClemente says that an NFL work stoppage tied to the expiration of the league’s contract with players in March 2011 would have an impact on total revenue, but might be relatively benign when it comes to profits, since the games are such a low-margin proposition for broadcast networks.
Walt Disney (ESPN), News Corp. (Fox), CBS and NBC all have football on their schedules, and it costs them a collective $3B annually for those rights. DiClemente says they would still have to make payments to the NFL, even if part or all of the season is lost due to a work stoppage, but would gradually recoup this expense during subsequent years.
DiClemente calls NFL broadcasting a “very cost-intensive, low-margin business,” and suggests that profitability might actually improve for networks that are able to come up with effective replacement programming.
One item that is almost certain to be part of the upcoming team/player talks is the expansion of the annual schedule from 16 to 18 regular season games and DiClemente believes it will be a feature of the 2012 season. He further believes that the NFL Network will increasingly become a leverage tool for the NFL when negotiating carriage terms with networks, but doesn’t see it as a near-term factor. The network package is up for renegotiation in 2013.