Fansided

The NFL TV money machine is bogging down, and the maintenance crew is on lunch

By Derek Helling

Leslie 'Les' Moonves, president and chief executive officer of CBS Corp., speaks at the Milken Institute Global Conference in Beverly Hills, California, U.S., on Wednesday, May 3, 2017. The conference is a unique setting that convenes individuals with the capital, power and influence to move the world forward meet face-to-face with those whose expertise and creativity are reinventing industry, philanthropy and media. Photographer: David Paul Morris/Bloomberg via Getty Images
Leslie 'Les' Moonves, president and chief executive officer of CBS Corp., speaks at the Milken Institute Global Conference in Beverly Hills, California, U.S., on Wednesday, May 3, 2017. The conference is a unique setting that convenes individuals with the capital, power and influence to move the world forward meet face-to-face with those whose expertise and creativity are reinventing industry, philanthropy and media. Photographer: David Paul Morris/Bloomberg via Getty Images /
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Advertisers are shying away from paying broadcasters’ ransoms for spots during NFL games, and the people most qualified to address the challenge can’t be bothered.

If CBS’ approach to maintaining the revenue from NFL games is typical of how everyone who pays their bills with the NFL TV money machine, a small glitch might turn into a real problem.

It’s the impending “bubble burst” that has been discussed ad nauseam in sports media. The story begins last season, when for a myriad of reasons that worked in concert to produce dissonant music like an elementary school band, ratings for NFL games on television did the one thing that everyone in the business hoped that they would never do. They dropped across the board.

Partially in response to that ratings decline, advertisers like automobile manufacturers and erectile dysfunction treatment drug producers have decided to buy less time during NFL games. There are other factors at play in this decision, however.

Despite a greater number of ways to put video ads in front of NFL audiences than ever, broadcasters like CBS have still raised prices for the spots. Simple economics have proven that greater supply, decreased demand and higher prices eventually lead to the market for a good or service adjusting itself. That’s exactly what is on display here.

As advertisers become more conscious of return on investment for their NFL ad buys, it isn’t difficult to see the hypothetical consequences for all those involved. Decreased revenue from ads eventually leads to lower profits for broadcasters like CBS, who then in turn will be the Uncle Rico to the NFL’s Napoleon Dynamite by offering less money for the broadcast rights when the current contracts expire.

The NFL getting less TV money means that it would have to find ways to make up that revenue. The possibilities there seem to be many, but it’s likely that the cost will most be carried by the fans.

While the NFL has made an attempt to allow broadcasters to recoup some advertising losses by lifting the ban on hard liquor ads, they seem to be the only party taking some real action to address this issue. CBS CEO Leslie Moonves has had some discussions with NFL Commissioner Roger Goodell about possible solutions, and it seems that the biggest adjustment agreed upon was a reduction in the number of commercial breaks during games.

That sounds great for the average fan, but this reduction is more of a reformat. According to Berkeley Lovelace Jr. of CNBC, Moonves has stated that the change will be four longer breaks instead of five breaks. The total commercial time during an NFL game won’t go down at all.

The party most responsible for deciding how television audiences consume NFL games, the broadcast companies, apparently see 2016 and its fallout as a minor glitch manifested by the NFL TV money machine that will work itself out quickly. The increased prices demanded for ad spots and the non-change applied to commercial time are proof of that.

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To be clear, it isn’t that the NFL TV money machine isn’t producing. NFL games are still king on television as far as ratings go. The machine simply isn’t producing at the capacity that it once was. For the broadcasters like CBS to assume they can do nothing about that and continue to see profits grow, however, is like a maintenance crew that can’t be bothered to make small repairs. Eventually, those little problems turn into a situation that requires shutting the whole factory down.

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