With $3 Billion on the Line, Buyers Plot NFL Alternative

If the prospect of a NFL-free 2011 has football fans scrambling for the Cymbalta, advertisers are facing an even more disheartening reality. According to media buyers, clients that invest a good chunk of their TV budgets in NFL games now face the daunting task of trying to find a replacement for the only game in town.
Talks between players and owners have not resumed since the March 11 lockout, and while a hearing that could potentially restart the clock on the 2011-12 NFL campaign is scheduled for April 6, most insiders believe a resolution won’t be reached until later this summer.
In a worst-case scenario, the loss of the NFL will wipe as much as $3 billion in ad revenue off the books at CBS, Fox, NBC and ESPN. Fox has the most skin in the game, generating north of $975 million in ad dollars with its Sunday NFC package. Per industry estimates, NBC hauls in some $850 million with its prime-time Sunday Night Football showcase while CBS’ AFC coverage churns up around $825 million.
Per terms of its rights deal, ESPN’s Monday Night Football carries the lightest spot load, with ad sales adding up to around $175 million. (The ratings generated by MNF allow ESPN to charge cable and satellite TV operators the highest carriage fee in the business—$4.40 per sub per month. By way of comparison, TNT charges the second-highest affiliate fee at $1.03, per SNL Kagan estimates.)
Obviously, the first thing clients stand to lose should the NFL fail to materialize this fall is reach. According to Nielsen ratings data, pro football in 2010 accounted for eight of the top 10 most watched programs on TV, and a ninth, CBS’ Undercover Boss, was the beneficiary of a Super Bowl lead-in. On the cable side, ESPN claimed each of the top 10 slots and 15 of the top 20 with its Monday Night Football juggernaut.
In the event of a no-show, the broadcasters would stand to lose between 25-30 percent of their fourth-quarter 18-49 ratings points. ESPN could face an even greater deficiency; per MagnaGlobal analysis, Bristol could lose as much as 54 percent of its nightly 18-49 deliveries in the absence of Monday Night Football.
Buyers will look to mix and match in order to make up for those vanished GRPs, as it is frankly impossible to make a wholesale swap. “We’ve had contingency plans in place with our clients for 12 to 18 months now. The thing is, you just can’t replace the NFL audience one for one,” said Shane Ankeney, evp, managing director, Initiative U.S. “There may be a fair amount of programs with a male skew out there but certainly nothing that can stand alone. So we’ll be looking at a combination of other opportunities.”
League partners are particularly vulnerable. Last year, Anheuser-Busch InBev supplanted MillerCoors as the official beer of the NFL, plunking down $1.2 billion for a six-year contract. Pepsi-Cola has a standing annual commitment of $70 million while Gatorade’s association with the league is worth $45 million.
“The clients that look at football as a way to draw a big audience aren’t nearly as concerned as the folks on the other side of spectrum, the sponsors that truly look at NFL as a partner,” Ankeney said. “For clients with deeper partnerships with the NFL, those impressions will be difficult, if not impossible, to replace.”
Most agencies seeking reach will look to snap up relevant prime-time avails, but marketers that lock in on the younger male demos are increasingly eyeing the digital space. “You’re not going to garner the ratings that are lost with any replacement programming,” said Hank Cohen, CEO of KSL Media. “If there is no football to watch in those dayparts, fans are going to migrate to digital platforms. In a sense, they’ll use the Web as a means to counterprogram.”