Editor’s Corner—Did Fox overpay for NFL Thursday Night Football?

According to The Wall Street Journal, the five-year deal is valued at about $3.3 billion. (Image: Fox Sports)
Ben Munson

Fox will be the new home for NFL Thursday Night Football, but the price it paid for the rights has yet to be confirmed. Reports suggest Fox paid a sizable premium. Was it a good deal?

According to the reliable John Ourand from Sports Business Journal, Fox Broadcasting has a new five-year deal in place with the NFL that will see the network spend $550 million per season for 11 Thursday night games. That’s $100 million more than CBS and NBC split during the previous two seasons for a similar broadcast package including 10 games.

But by breaking down the cost per game, the price Fox is paying isn’t glaringly more that CBS or NBC. Per CBS’s and NBC’s deal, each network was paying the NFL about $45 million per Thursday night game. In Fox’s deal with the NFL, the network is reportedly paying about $50 million per game.

Ourand pointed out on Twitter that the fact that Fox’s deal is for five years makes it a better bargain than the two-year deals secured by CBS and NBC.

But according to The Wall Street Journal, the five-year deal is valued at about $3.3 billion, which breaks down to $660 million per season or $60 million per game. That represents a more than 30% increase above what CBS and NBC each paid per game, a significant upsurge. However, it’s easier to wrap your head around that price bump when considering that CBS paid about $37.5 million per game for 8 games during the 2014 season.

It’s clear that the cost for Thursday night NFL games has been gradually increasing over the past several years so Fox may have made a smart move by locking in a more long-term contract than previous Thursday night broadcast partners, ensuring a fairly steady rate over the next five years.

It’s worth noting also that, according to media analyst Michael Nathanson, Fox already pays about $1.1 billion per season for Sunday NFC day games. Even by adding another $660 million or $550 million per season to that total, Fox would still be paying less per season than the $1.9 billion ESPN currently pays for Monday Night Football.

However, as Nathanson points out, Fox is preparing to sell a considerable chunk of its entertainment assets to Disney in a deal valued at $52.4 billion, which would leave a much smaller “New Fox” once the dust settles.

“New Fox would be a significantly smaller company so any increase in the cost of NFL rights packages could have a disproportionate impact on its earnings,” wrote Nathanson in a research note.

Of course, another consideration beyond the actual price paid for Thursday Night Football is how much the programming is worth to Fox as compared to other networks.

Marketing consultant Marty Conway noted on Twitter that Fox had a fairly expendable Thursday night lineup, making Thursday night NFL games an upgrade for the primetime slot.

According to live+same day primetime ratings from Jan. 25, 2018, Fox lagged behind ABC, CBS and NBC. ABC held the top spot in the 8 p.m. time slot with “Grey’s Anatomy,” NBC grabs a good size audience at 8:30 p.m. with “The Good Place,” and CBS’s “The Big Bang Theory” and “Young Sheldon” held down the 9 p.m. and 9:30 p.m. time slots, respectively.

Comparatively, Thursday night primetime ratings for Oct. 26, 2017 showed Thursday Night Football on CBS firmly dominating the 8:30 p.m. time slot.

That notion that a strong primetime programming slate can somewhat compensate for no football was seemingly confirmed by CBS’s statement regarding the loss of Thursday night games.

“We explored a responsible bid for Thursday Night Football but in the end are very pleased to return to entertainment programming on television’s biggest night,” said CBS in a statement. “We currently have the two most watched shows on Thursday, including the #1 show on television in ‘Big Bang Theory,’ and the #1 new show on television in ‘Young Sheldon.’ At the same time, we look forward to continuing our terrific long-term partnership with the NFL on Sunday afternoons, with more than 100 games per season including next year’s Super Bowl LIII.”

Regardless the ramifications for Fox’s live sports content budget and Thursday night ratings, the network seems exceedingly pleased to be in deeper with the NFL.

“Football is in our blood at FOX and we understand that nothing beats the NFL when it comes to television that captures people’s attention,” said Peter Rice, president of 21st Century Fox, in a statement. “Our historic relationship with the NFL dates back to the earliest days of FOX, and we couldn’t be more excited to expand our deep and enduring partnership to include primetime games on Thursday night.”

Time will tell if the price Fox paid was worth it.—Ben | @fierce_video