September is right around the corner, which means that from
now until Groundhog Day, football will dominate television sets in many households during
But while pigskin-happy cable subscribers can dial up just
about any college-football game via pay-per-view, for the fourth straight year,
they'll be shut out from accessing National Football League out-of-market games.
The NFL continues to say that it is happy with its
arrangement with DirecTv Inc. to distribute 200 out-of-market games, and it doesn't
have any plans to change. But with the DirecTv deal set to expire after the 1999-2000
season, it's time to consider digitally enhanced cable systems as viable distribution
outlets for the package.
The league's early argument that not enough operators
have the channel capacity to handle 13 NFL games each Sunday won't fly by 2000. The
industry is expected to have nearly 5 million digital households by 2000, with almost all
of them offering at least 10 to 20 channels of PPV programming.
While that's not much when compared with 70 million
total cable households, it's certainly enough to test whether operators can deliver
substantial revenue to the league.
The league has also expressed concerns about hurting
broadcast-network ratings if out-of-market games are widely distributed via cable.
However, DirecTv has more than tripled its subscribers since launching "NFL Sunday
Ticket" in 1994, and NFL ratings have not dropped significantly over the same period
Meanwhile, DirecTv has consistently generated double-digit
buy-rates for the games. Last year, the service generated a significant portion of the
550,000 Sunday Ticket buys pulled from satellite and C-band services.
Further, DirecTv is expected to have between 5 million and
6 million subscribers by the turn of the century -- about 5 percent of all television
households. If the NFL renews with DirecTv at that level of penetration, then PPV revenue
arguably becomes a bigger component of the whole equation. Given that scenario, the
addition of 4 million digital-PPV households would further increase the revenue potential
for the league.
But operators have to prove that they're worthy of
offering the games. Operators haven't exactly scored consistently with ESPN's
college-football out-of-market package, nor for that matter, with packages for college
basketball and Major League Soccer.
But with both Viewer's Choice and Action Pay-Per-View
offering this year's PPV college-football package, the additional exposure will
hopefully render better buy-rates and higher revenues.
Also, logistical problems such as network distribution,
billing procedures and blackout provisions would have to be ironed out before any accord
could be reached.
With player salaries continuing to reach dizzying heights,
the NFL -- as well as Major League Baseball, the National Hockey League and the National
Basketball Association -- will continue to look for new revenue opportunities.
Operators, too, are looking for new revenue sources to help
subsidize the expensive deployment of digital technology.
It's high time that the leagues and cable begin to