ESPN may lose the NFL, but not by choice, analyst says

ESPN could lose its NFL rights, but not for lack of desire to keep them, according to BTIG analyst Rich Greenfield.

A Hollywood Reporter column suggesting ESPN might abandon its NFL rights package has been met with scrutiny. BTIG analyst Rich Greenfield has joined the chorus, saying if ESPN loses “Monday Night Football,” it won’t be by choice.

In James Miller’s guest column, he points toward language in ESPN’s newest MVPD contracts that allows the network to get the same $7 subscriber fees it gets now even if it no longer carries the NFL.

“Sure, distributors would be aghast, demanding to negotiate lower fees probably immediately, but the point is, there would be negotiations, enabling ESPN to do everything it could to keep those numbers as high as possible,” Miller wrote.

He also notes that, given ESPN’s struggles to support its enormous programming costs as it continues to lose pay-TV subscribers, ditching the $2 billion per year it pays for NFL rights (ESPN’s contract with the NFL is through 2021) could help it cut costs.

Greenfield agrees that subscriber losses coupled with advertising pressure due to lower ratings could have a negative effect on ESPN’s ability to retain “Monday Night Football,” particularly at such a high price.

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“Whereas, if a company like Amazon wants the rights, they could easily bid at levels that would be far beyond what Disney/ESPN could compete with, as they could look at a far broader relationship with the NFL than just television (think ticketing, link, and merchandise),” Greenfield wrote.

Greenfield said that ESPN could lose its NFL rights, but not for lack of desire to keep them, but rather because it won’t be able to compete with the scale and financial power of other companies interested in the rights. And if ESPN does lose the rights, it could cost it and parent company Disney significant leverage in future negotiations with MVPDs.

“Without the power/leverage of Monday Night Football, we believe Disney would be forced to accept dramatically lower rates in future rights deals, less minimum penetration protection and possibly even face the real risk of being dropped (which has been largely unthinkable historically due to the importance of MNF). Beyond the impact on affiliate revenues, the NFL provides ESPN with its 17 highest rated shows of the year. Losing MNF would therefore have a severe impact on ESPN advertising, especially when you think about how ESPN ties NFL advertising to broader advertising buys on their suite of network,” Greenfield wrote.