The NFL's Billion-Dollar Cash Grab and Whether There’s Any Left for Film and TV

14:26Alex Sherman:you know, YouTube got a one-off game in week one this past season. I think it was Chargers Chiefs, you know, Brazil, right in Brazil. Right.

14:36Matt Belloni:Yeah.

14:36Alex Sherman:You know, that game, I don't remember the exact total. Actually, I think the audience somewhat underwhelmed what people thought. But, you know, it was in like the 18 million range, something like that, if memory serves correctly for how many people watch. You know, the big playoff games, obviously, you know, if you're if you're really extending it to the AFC NFC Championship, those games can get like 40 million people. So like the numbers just blow out anything other than sort of the championship games or like the Olympic championship games for any sport. So we're just talking about something that's in a completely different stratosphere than anything else in terms of eyeballs of ratings.

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16:10Matt Belloni:So B of A, our friend Jessica Ehrlich put out a report a couple of weeks ago talking about the impact of these renegotiations on Fox and how Fox is going to potentially be negatively impacted by any fee increase. But she also noted that to potentially offset these additional charges, Fox could manage their other sports rights costs within the portfolio, meaning drop some stuff or reduce some stuff and i think that we could soon see a rebalancing of all of these rights because of how expensive the nfl is i mean your parent company versant is talking about potentially picking up some games because others might have to we saw espn offload some college football games to warner brothers discovery because they now pay so much for that like are we about to see a a pretty big reshuffling of where people watch sports this is a very uh unique time for these

17:16Alex Sherman:media companies because i think we are on the cusp of what will be a fairly significant rebalancing i think that's the word not just jessica ehrlich that said it but actually laughlin murdoch the the fox ceo i mean he he came right out and said that he expects fox you I think the quote that he said was, Fox is prepared to rebalance its rights, something like that. And so you then will have to take a look at all of the different sports rights.

17:45Matt Belloni:They should rebalance Tom Brady. They should rebalance his$300 million to offload him to Versant.

17:52Alex Sherman:That's the thing, which is that what he's saying is that that is not the direction that we're going to keep Tom Brady in that loaded contract. And instead, we're going to rebalance, you know, for Fox, it's probably soccer rights, you know, for other companies like like, for instance, you know, CBS coming together with Turner. Both of those companies now have a lot of sports rights in their portfolio. If CBS is going to pay a billion dollars more for the NFL, it's there's two things that are probably going to be cut. One is your lead in. Right. It's entertainment programming, which we've already seen.

18:25Alex Sherman:We've already seen so many of these companies lean into cheaper reality programming and ditch scripted. So entertainment programming will probably continue to feel the brunt of this. But the other thing that will probably be let go are these smaller sports rights where the budget will kind of indicate, you know what? It's not just the budget, by the way. It's the strategy behind it, right? If any of these media companies has the NFL, they don't need to have a lot of these smaller sports. That's what Turner, when it lost the NBA, it shifted its strategy to start accumulating smaller sports rights so that it could buoy the distribution fee that it charges all other pay TV providers.

19:09Alex Sherman:So it signed up the French Open and it struck a deal with Unrival, the three-on-three women's basketball league.

19:16Matt Belloni:Don't forget the Savannah Bananas.

19:17Alex Sherman:Savannah Bananas, right. AEW Wrestling. Like it started to pile a lot of these smaller sports with the hope that this hodgepodge, it struck a deal to sub-license a few college football playoff games from ESPN. The hope was that all of this stuff together would roughly accumulate the value of the NBA. Well, if Warner now comes together with CBS, the whole sports strategy changes because now TNT is negotiating these deals alongside the entire CBS portfolio. It doesn't need all of these smaller sports anymore to buoy its distribution.

19:55Matt Belloni:I agree. I think they're going to drop a lot of that stuff and which will create opportunities for potentially some other smaller networks. For Versant. Yes. If USA could pick up the Savannah Bananas. easy do you think that we're going to start to see the premium sports from cbs across the portfolio like ufc on hbo and the masters you know early rounds on tnt that kind of thing i think it

20:21Alex Sherman:depends on the sport but broadly speaking yes i do by the way that may go both ways you know it made david ellison and his sports team in conjunction with turner assuming the deal gets done they may decide they want to keep nhl for instance and then those nhl games you know espn has dominated the finals uh because the the the nhl has decided it would basically rather have its championship stanley cup games on espn rather than on tnt well now if this is one company now you've got cbs a broadcast network maybe the nhl says actually we'd love to have those finals games air on CBS. So why don't we move some of the hockey, the premier hockey games from TNT over to CBS if we strike a new deal?

21:06Alex Sherman:So I think we're going to start to see a two-way street there of all of the sports that remain where there's juggling between the cable networks and the broadcast network CBS both ways.

21:17Matt Belloni:So because of this NFL Death Star, I think the other leagues are all trying to strategize around it. You know, you mentioned the NHL. They have their rights coming up. I believe it's after next season.

21:32Alex Sherman:After 2028 also, just like Major League Baseball.

21:35Matt Belloni:After 2028. Okay, so NHL and Major League Baseball are both approaching this Death Star differently, right? The NHL wants to go first. They want to get a new deal. And the MLB seems to be waiting a little bit. Now, MLB has its own issues with the regional sports networks and all that. And we don't need to talk about that. Let's talk about the national rights here. Because I think MLB is the interesting one. Because they are seeing a surge lately. The World Series ratings were way up. This World Baseball Classic has been a huge ratings driver. I mean, I've been watching it. My kid is super into it.

22:14Matt Belloni:Against the Oscars, too. I know. I think they actually took some viewers away from the Oscars. But what is the strategy for these other leagues when the NFL is now so dominant?

22:26Alex Sherman:Yeah, so that was good lead in. I think they differ. I think for Major League Baseball, I believe Rob Manfred wants to do sort of a complete rewrite of the whole media landscape. Not only will they have access to at least some of the local rights at the end of the 2028 season.

22:46Matt Belloni:based on the implosion of that regional sports network,

22:49Alex Sherman:the implosion of the regional sports network, right. Which will probably continue to implode over the next several years.

22:55Matt Belloni:Yeah. Because of cord cutting, they can't justify not enough people paying when they don't watch. So we don't have to get into that.

23:00Alex Sherman:My understanding is that he wants to totally rewrite these packages. So that is not, for instance, it's sort of the antithesis of what I expect to see from the NFL, which is the NFL will probably just keep all of the packages the same with all of the current providers and just have them pay more money. And then they'll get rid of that opt-out class. Major League Baseball may do totally new packages, totally new partners. And so in order to do this, you have to have all of those rights expire. Like you can't just front run the deal.

23:36Matt Belloni:They just moved Sunday Night Baseball from ESPN to NBC, but that's a short-term deal, right?

23:41Alex Sherman:So that's where Major League Baseball is right now. They have a bunch of these short-term deals out there that all of these, both the league and the media partners themselves, are kind of just waiting to expire. So Sunday Night Baseball, that went to, in part, it went to NBC. The Home Run Derby went to Netflix. And, you know, like, but all of that runs out in 2028. It was a short term deal. They have this, you know, the Apple Friday night baseball thing and a small package with Roku. Like all of that stuff goes away at the end of 2028. And then they have their main packages with Turner and Fox.

24:17Alex Sherman:So I would expect a complete rewrite of everything.

24:22Matt Belloni:I'm guessing Turner goes away.

24:23Alex Sherman:Look, again, if Turner may be CBS at that point. So maybe CBS wants a package and it quasi goes away because some of the games are on CBS and then some of the games end up on TNT. That one's a tough one. But it's hard to move up your negotiation date to get ahead of the NFL when there's just so much in flux with your strategy. It would be much easier if all you needed to do was renew the rights because the way these deals are done, the incumbent partners actually have exclusive windows where they're the only ones that can negotiate for a while. So if you're going to front run it, you need to basically just renew with your existing partners.

25:05Alex Sherman:Maybe the NHL could do that, but this CBS-Turner deal now throws a wrench in that because you have to wait to figure out, is this deal actually going to close or not before you would do a deal with Turner? So I think the NHL is kind of forced to wait until at least that happens. And, you know, when is that going to happen? I don't know, September, October, later, who knows?

25:26Matt Belloni:You get into the NFL question then, where if the NFL is renegotiating and all the money is going to NFL, than what's going to be left over for NHL and MLB. And throw in the prospect of an MLB strike, which most people believe will likely happen after this season, at least a lockout. And that could just kill their momentum.

25:50Alex Sherman:Yeah. All of these are the questions that are, you know, being wrestled with right now. And the big one obviously is, if and when the NFL strikes these new deals with their media partners, how much money is left for all of these sports, which by the way, you mentioned that the ratings were surging for major league baseball. They're also surging for the NHL. I mean, the Olympics really helped too. Those ratings were up to begin with. Now all sports ratings are up because Nielsen kind of rejiggered the way they do things, but the NHL ratings are up even more than sort of your standard. You know,

26:23Matt Belloni:every four years, people are reminded that there's still a major sport where they let you fight.

26:27Alex Sherman:That's right. And the Olympics really helped. So the NHL is going to be looking for an increase and major league baseball is going to be looking for an increase and something probably needs to give here. And it's not going to be the NFL.

26:39Matt Belloni:So give me the general takeaway right now in sports media rights. Like, what is the one thing to know about what's going on right now? Like, is it just that all of this is going to eventually mean less entertainment content because all of the sports rights are going to take up so much more of the budgets? Or is it that we're going to see the entire sports landscape transition to streaming over the next five years? I don't think that's true. I think linear is still valuable.

27:12Alex Sherman:Yeah, I mean, again, like the NFL is such a power vacuum. that simply keeping the NFL on the broadcast networks, to your earlier point, is going to keep them alive and well. So I do not see that happening. Once the NFL is on broadcast, then all these other sports can also be on broadcast. And by the way, a lot of these other sports rights are locked up for years to come already, so we already know they're going to be on broadcast and or cable to some degree. But I think the big story really is, are all of these sports that are showing increases in ratings going to just keep taking money out of the pie so that all of the non-sports bear the brunt of this?

27:51Alex Sherman:Or are we going to see the second tier, the non-NBA NFL sports have to take it on the chin because the money is just not there from them in this ecosystem? I think that is the real question that nobody knows what the answer is to.

28:08Matt Belloni:Or F1, do a deal exclusively with Apple where you just go on that service and then kind of disappear.

28:13Alex Sherman:Well, right. And F1 ended up getting a decent amount of money because Apple was willing to pay because no other sport really wanted to be on Apple because they don't have the eyeballs. They got MLS. They got Major League Soccer, which has not been a deal that all the parties have been in love with.

28:29Matt Belloni:Well, I'm just sad for Craig because I think that over the next five years, there's going to be an NFL game every day of December. So he will basically never see his family around. That's right. The NFL is messing with its one most powerful asset, which is scarcity, and they're getting rid of it. Exactly. So good luck to Craig. All right, Alex, thanks for coming on. My pleasure as always, Matt.

28:53Alex Sherman:Thanks.

28:55Matt Belloni:Okay, we are back with the call sheet. Craig, you're a big Ryan Gosling guy. I know you talk about him often. I am. I love Gosling. We just did, or we're about to do The Nice Guys on the Rewatchables. Nice. Big fan of his. Love that movie. I'm a fan. I'm not convinced that he is a huge box office draw. I believe we talked about this when the Fall Guy opened. He's had hits. Obviously, Barbie was huge. That was not sold on him. But he is a value add. And this is his first real test of Ryan Gosling star power with Project Hail Mary. And honestly, I think it's going to work. Do you agree? You've seen it.

29:39Matt Belloni:I did see the movie. I think families and kids are going to really like this movie. It is much more family-friendly and sweet and kind than I expected. I think it's, there are certain marketing of it that I think tells you that it's a little bit like Interstellar, which I would disagree with. It is much more tonally like a family-friendly version of The Martian. So I think like parents, kids, it's going to do really well. And it's going to do really well on Prime for years because it's something you can throw on. It's really funny. And Gosling is really charismatic in it. Definitely taking my kid.

30:07Matt Belloni:And the reviews are great. Lord Miller, like, Deliver Again. They have a pretty strong hit rate there. But for Amazon, it's really interesting. This is by far their biggest test of the new strategy. They've got the new leadership in there. The highest grossing movie ever for Amazon is Creed 3, which was a legacy MGM title, 276 worldwide. Their biggest like Amazon proper movie is probably Red One from last year, which only got to 186. And that was hugely expensive. This movie is a$200 million about movie. So it's got to get up there to like 450, 500 to even be considered break even in theaters.

30:54Matt Belloni:And I think they're going to do it. The tracking for the opening weekend, NRG has it at 57. The last I looked. Other surveys have it in the mid-60s. I'm going to set the line at$63 million for the opening weekend, and I will take the over. I think I'm going to take the under. Oh, why? That feels very high. You just got through saying that this is like, you know, all audiences, family-friendly, crowd-pleaser. That's all true. However, and I think the movie will have great legs. However, like you said about Gosling, I don't know. You look at a movie like The Martian, which opened to 55. Gravity opened to 55.

31:32Matt Belloni:Interstellar opened to 47. Okay, but that was 15 years ago. Yes. Inflation would take that over where we are now. Sure. Well, okay, it's not like that was 30 years ago, but also more people went to the movies back then. I think we're in a little bit of a different era now, and I think Interstellar was Nolan. This is Lord Miller, which I would say the average person doesn't know, and Gosling, like you said, we don't know yet if he is like a go-to-the-movies draw. I think this movie's going to do really well, but that number feels a little high to me. that's a curveball i would have thought you'd be very pro you and amy kaufman our friend is you're the two biggest gosling supporters yet you're now i love gosling i think he's the best snl host right now i think he's wonderful okay well uh we will do a for some accountability from last weekend yeah i did not hit the under on reminders of him it came in at 19 and i took the under on 14 so i need a win here i think i'm gonna get it taking the over on 63 for project You were correct, however, on the Oscars.

32:31Matt Belloni:You took the under on 19.7 million. Yes, so sad for the Oscars. All right, that's the show for today. I want to thank my guest, Alex Sherman, producer Craig Horlbeck, art editor John Jones, and I want to thank you. One more show this week.