Time Warner Inc. and General Electric Co. made it official
last week -- they will attempt to launch a rival professional-football league that will
compete against the mighty National Football League.
That was all that they said, however, leaving industry
observers to contemplate how such a league could possibly succeed in an already-glutted
sports marketplace. Yet there are some who believe that when the smoke clears, Time Warner
and GE may have the last laugh -- particularly if they're able to generate
significant interest from cable operators and broadcast affiliates, which could become
financial partners in the venture.
The surprise announcement last week -- made during halftime
of NBC's May 27 Chicago Bulls-Indiana Pacers National Basketball Association playoff
game, and on Cable News Network -- confirmed plans that Time Warner and GE intimated in
January, after losing their respective NFL-television packages. Time Warner's Turner
Network Television lost its half of the Sunday-night cable package to ESPN after the
network, which is owned by The Walt Disney Co., bid more than $600 million -- more than
double the cost of the previous deal.
And GE's NBC Sports division lost its longtime hold on
the American Football Conference package to CBS' bid of $550 million.
The companies put out a statement that said: "General
Electric and Time Warner announced [Wednesday night], after several months of extensive
study, that NBC and Turner Broadcasting [System Inc.] are moving forward toward the
creation of a new professional-football league. We have agreed upon a clear vision of a
working model, and we have appointed Dick Ebersol of NBC and Harvey Schiller of Turner
Broadcasting to spearhead this effort. Both parties anticipate a complete announcement
The announcement, however, opened up much speculation as to
whether the league could prosper. Previous attempts to launch competing football leagues
have failed. The most recent attempt -- the United States Football League, in the 1980s --
went under after trying to secure major NFL talent.
While both Time Warner and GE have deep pockets, industry
observers feel that the league could not afford to get into a bidding war with the NFL for
marquee talent, which is key to drawing new viewers.
"The key for them is to control costs," said John
Mansell, sports analyst for Paul Kagan Associates Inc. "You want to attract some
marquee names, but you don't want to fill up the rosters with high-priced free
Yet without recognizable talent, one MSO executive, who
wished to remain anonymous, questioned the audience potential for the league.
"There is already a glut of sports on television
today. To add another professional league to a marketplace now would draw very, very low
ratings -- especially with no-name players," the executive said.
ESPN isn't too concerned about the potential
"The NFL is the premiere football product, and our
football focus right now is on maximizing its value across all of our entities," a
company spokesman said.
But Mansell said the companies may have a few things in
their favor that could make the league successful. For one, they already have built-in
television outlets in TNT and NBC, which are looking for programming to fill the void left
by the loss of the NFL.
"Also, it's so much easier to create new
franchises now, because there are so many new stadiums that have been developed or that
are in development," he said.
Mansell also suggested that TNT and NBC could include cable
operators and NBC-affiliated stations as part-owners in the league or as owners of teams
in the markets that they serve. That way, both companies would share the financial costs
of running the league, while operators and stations would have a financial incentive to
see it succeed.
Further, industry observers said, the league could attract
some advertisers that may be shut out of the NFL or that can't afford the NFL's
high advertising rates.
"If I'm an advertiser, and I could pay a lot less
and get a decent rating, the league would look very appealing," one advertising
But Jerry Solomon, president of national-broadcast sales
for SFM Media, said it's too early to determine anything about the league.
"Until we find out what [Time Warner and General
Electric's] motives are and what they're trying to accomplish, we can't
make any estimations," he said. "For someone to say that it's not going to
work is ridiculous until you find out why NBC and TNT are creating the league."