Double Take: NFL Lockout Would Help Network Bottom Lines In The Short Term

Categories: TV Sports Ratings & News

Written By

March 4th, 2011

The potential NFL work stoppage would likely prove a one time positive for TV network profits, while at the same time putting them (Fox, CBS, NBC, ESPN) into a ratings hole.

From a Fitch Ratings note:

"In the event of missed games, the broadcasters would realize lower revenue, as the aired replacement content (likely re-runs to avoid incremental production costs) will not have the high ratings, significant advertiser interest and premium-priced ad spots associated with NFL games," Fitch said. "However, such a scenario would likely provide a one-time boost to EBITDA [earnings before interest, taxes, depreciation and amortization], as license fees would not be realized as expenses if the games are not shown and the related ad revenue not collected. High license fees generally result in sports programming being only minimally profitable to the broadcasters, and replacement content would be more profitable."

While it's not difficult to calculate the direct, immediate financial benefit for not having to pay the NFL license fees, it's far more difficult to calculate the secondary negative effects of losing the NFL games (promotion, etc.).

 
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