NFL Week 17 Showdown

Forget the endless permutations of playoff implications, who gets what draft pick, and the rest of the end of the season NFL drama. From an economic perspective, the most interesting end-of-the-season matchup is between cable TV giants Time Warner Cable and Cablevision and the fledgling NFL Network.

In the 21st century television market sports networks are cash cows, generating large revenue streams from relatively inexpensive programming, especially when owned by a sports property. In order to earn really big revenues, a cable sports channel has to be part of the basic package offered to every subscriber. Many cable companies are reluctant to add channels to their basic package, because they have to pay the channel on a per subscriber basis and find it difficult to pass this additional cost on to the consumer.

The NFL started its own sports channel, the NFL Network, in 2003. In 2006, the NFL Network started showing regular season games on weeknights toward the end of the season. The NFL clearly wants its network to compete with the ESPN family and the myriad regional sports networks. In order to compete with these channels, the NFL Network needs to be part of basic cable, like ESPN, ESPN2, and the regional sports networks. Up until now, the big cable players, Time Warner Cable and Cablevision, have declined to make the NFL Network part of basic cable.

Week 17 has brought things to a boil, because the potentially historic season finale between the (most likely) undefeated New England Patriots, who only have to beat a terrible Miami Dolphins team to go 15-0, and the New York Football Giants. This game will be broadcast on the NFL Network, which is available to less than 40% of the US television viewing audience. This has led to all sorts of wailing and gnashing of teeth. Today’s Connecticut Post reports that the entire Connecticut Congressional delegation sent a letter to NFL president Roger Goodell imploring him to put the game on over the air TV. Predictably, other members of Congress have smelled the opportunity to make political hay out of the situation, and rumblings about revoking the NFL’s antitrust-exemption have been heard from the vicinity of DC.

I think that the NFL has gotten exactly what it wanted to out of this situation. The furor over the Pats-Giants game will probably force Time Warner Cable and Cablevision to do something about the NFL Network. Goodell has already said that the NFL would make the NFL Network and the game available to Time Warner Cable and Cablevision if they would submit to binding arbitration over the NFL Network impasse. But the antitrust threat may be more than the NFL wanted to bite off. As they say in the TV biz, stay tuned.

Hat tip to my PhD student Brian Soebbing, who saw this coming weeks ago.

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Author: Brad Humphreys

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