ESPN and the NFL are teaming up, and it’s changing the sports media game.
This week, Disney and the NFL announced that ESPN will acquire the NFL Network and other NFL media assets, including the NFL’s linear RedZone channel and NFL Fantasy, in exchange for a 10% equity stake in the network—a stake which could be worth $2 billion or more. In addition, the NFL will license certain NFL content and other intellectual property to ESPN, and Disney CEO Bob Iger noted on a recent earnings call that the network will have 28 NFL games annually.
The deal comes ahead of ESPN’s direct-to-consumer streamer launch later this month, and according to Paul Verna, vp of content, eMarketer, “It’s a win-win for Disney and the NFL.”
Verna noted that the NFL can utilize Disney to boost visibility and distribution for its NFL Network assets. Meanwhile, the Mouse House can benefit from the added draw of the NFL for its new streamer.
The partnership “cements ESPN’s alliance with the NFL,” Verna added.
“When you look at how Disney’s direct competitors are managing this whole transition from linear to digital, I think Disney is doing a much more effective job of it,” Verna said. “Warner Bros. Discovery, Paramount, NBCUniversal, they’re all having more growing pains, more issues getting from that point of traditional TV to the streaming economy.”
With the move, Disney may be setting itself up for the next evolution of the streaming landscape.
The drive for advertising
“The next battle in the streaming war is the battle for sports rights, and that’s all because sports engenders captive audiences that are advertiser-friendly, so all of this comes down to jockeying for ad revenue at the end of the day,” said Mike Proulx, vp, research director, Forrester.
And when it comes to ad revenue, it doesn’t get bigger than the NFL.
“NFL is the top of the pyramid of value in TV advertising, period, bar none, not even close,” Kevin Krim, president and CEO of measurement and analytics company EDO, said.
According to Krim, other marquee properties, including the NBA Playoffs, college football playoffs, or even the Oscars, all pale in comparison when it comes to attracting huge audiences and delivering engagement in ad breaks.
However, Krim noted that ESPN will “have to innovate” when it comes to ad options, especially with assets like RedZone not being endemic to ads, with the program known for constant action and showing every score.