NFL commissioner Roger Goodell said the league would be willing to consider negotiating an equity stake in the embattled NFL Network to secure long-term carriage with key operators and claims that cable companies that don’t have a contract with the service are misleading their subscribers into thinking that deals are imminent.
Goodell went on the offensive during an afternoon conference call with reporters Nov. 20, two days before the 35-million-home NFL Network, which has been engaged in ongoing disputes with leading cable operators Comcast Corp. and Time Warner Cable, kicks off its second season of eight primetime contests with the Indianapolis Colts-Atlanta Falcons game on Thanksgiving night.
He was asked whether the NFL — as Major League Baseball did with carriers for its MLB Channel, slated for a linear launch in 2009 — would consider the possibility of selling equity interests in the NFL Network to a Comcast or a Time Warner as a means to reach some sort of closure. Goodell prefaced his remarks by noting “that’s one of the reasons why independent programmers are now talking to the FCC” and why the agency wants to examine whether cable has become too dominant and is using its “distribution leverage inappropriately in that case.”
Goodell then noted: “Again, everything is a negotiation. There’s tremendous value in the NFL Network as an asset, more strategically than anything to the NFL. But that is something that I know that they are clearly interested in, and we would negotiate on any terms.”
Unfortunately, from a league perspective, Goodell said there weren’t any carriage negotiations with cable companies at press time.
As such, the NFL Network is looking forward to Nov. 27 when the FCC could include binding arbitration on its agenda. FCC commissioner Kevin Martin is endorsing rules that would permit the NFL Network to invoke compulsory arbitration under which an arbitrator would decide between the final offers tendered by the service and operators.
"The agenda is set by the chairman, Kevin Martin, and right now he's indicated it may be on the agenda," Goodell said, in response to a query about whether a binding arbitration ruling could occur that day. "That could obviously change...But it's clearly possible that it could happen. We would welcome that if it does happen, but we are not relying on that. We continue to want to make sure that we apply pressure on all fronts to make sure this got done in a reasonable fashion to all parties."
Goodell, without naming distributors, said cable companies lacking NFL Network contracts are disingenuously telling subscribers deals could soon be struck.
“We are not in negotiations, we are not close to a deal,” Goodell said, adding that fans “should not be lulled into this so that they wake up on the eve of a game and find out there’s no deal and they’re with the same cable operator.”
Although it has accords with DirecTV, Dish Network, telcos and some 240 cable operators, NFL Network has huge holes in its distribution lineup: It doesn’t have pacts with Time Warner Cable, Charter Communications, Cablevision Systems Corp. and Suddenlink Communications, among others. Those operators have balked at the network's push for digital-basic positioning and a 70-cent monthly subscriber fee for a service they view as having minimal value beyond its “run to the playoffs” package of eight late-season Thursday and Saturday night games
Moreover, NFL Network in May lost a court ruling that enabled Comcast to migrate the channel to a sports tier. That decision, which the league is appealing, has resulted in a major drop in its footing with the nation’s largest cable operator: from around 9 million homes last year to less than 1 million this season, according to Goodell. Any arbitration aside, Goodell doesn’t anticipate a resolution with Comcast before year-end.
Cable operators, by putting NFL Network on a sports tier, are taking away America’s most popular sport from consumers and charging them extra for it, according to Goodell. In the case of Comcast, sports tiers range from $5 to $8 per month, he said.
“The fact is that the vast majority of our customers have elected not to receive NFL Network,” Comcast replied in a statement. “Under our agreement with the NFL, which the league negotiated and signed, we offer the NFL Network as part of our Sports Entertainment Package. This is the best and fairest way to provide the NFL’s expensive programming to customers, because viewers who want to watch the channel will be able to see it, while others who prefer not to receive it will not be forced to pay.”
During the call, Goodell said that cable has sent mixed signals about how it values the Sunday Ticket: At times expressing interest in the out-of-market package, and at others indicating that all of the subscribers interested in it have already made the switch to satellite. To that end, he said cable bid too late when the pay-per-view package was available in 2002 and didn’t move in the more recent round of negotiations.
The Sunday Ticket and the eight-game primetime package were at the heart of the ruling that gave Comcast permission to switch NFL Network to a sports tier. In a summary judgment last May, New York Supreme Court judge Bernard Fried Judge Fried sided with Comcast about an agreement it made with the pro football league in 2004 that allowed it to move the NFL Network to a sports tier if the top cable operator didn't succeed in its quest to acquire rights to the Sunday Ticket or the eight-game primetime package for its network Versus, then called OLN. Sunday Ticket was retained by DirecTV at $700 million annually for five seasons, while the NFL Network received the eight-game slate in January 2006, despite OLN's $400 million-a-year bid.
In the meantime, Goodell, who said EchoStar’s Dish Network had also unsuccessfully made a play for Sunday Ticket, said the package would not become available again until after the 2010 season.
By the same token, Goodell said there is no contractual provision that would provide ESPN, which has seen ratings fall during the second year of televising the Monday Night Football franchise, any flexible scheduling relief over the life of its current $8.8 billion rights deal that extends through 2013. That mechanism, which broadcast brethren ABC had lobbied for during its final MNF contract, now allows Sunday night carrier NBC, with an eye toward improving ratings, to select some late-season games from Fox’s and CBS’s Sunday afternoon slates.
"We always evaluate how we can improve our packages, but that would have a dramatic impact on our fans, on our Sunday afternoon carriers, even our Sunday night carrier. So that is not a possibility," he said.
Goodell also sacked any hope that the final NFL Network game of the year, the Dec. 29 contest between the New England Patriots and New York Giants, could be opened to a wider audience. The Pats could complete an undefeated regular-season against the G-men in that affair.
“It will remain on NFL Network,” he said.
In addition to NFL Network carriers, the contest will be televised into the New York and Boston DMAs, under the league policy by which ESPN makes its cablecasts of the participating teams’ games available via over-the-air affiliates in the squads’ home markets.