Friday Dump 🥟 - Judge sides w/ NFL, Venu pricing, NBC Olympics ad sales

Author

Michael Sheinfeld
August 02, 2024

We need our morning Friday Dump 🥟 

Each Friday, we’ll breakdown 3 sports business stories that have caught our eye throughout the week. They will be assembled in the following format:

🔴 - Stories that make us stop, think, and question.

🟡 - Stories with a hint of risk and unpredictability.

🟢 - Stories that make us feel good to go and empowered.

Nothing like a good ol’ cup of Joe and a newsletter.

Pictured: NFL Commissioner Roger Goodell (center)

🔴 So much for that Sunday Ticket lawsuit. Just when we thought we were about to hop into the season on a spicy note, U.S. District Court Judge Philip Gutierrez rips it away from us and sides with the NFL. Yesterday evening, the judge struck down a $4.7B class action lawsuit as the key claims of the suit was that the league inflates the price of NFL Sunday Ticket. Gutierrez wrote that the “jury’s damages verdict is clearly not supported by the evidence and must be vacated.” Let’s dive into this a little more…

  • Essentially, Gutierrez was skeptical on how the jury came up with the $4.7B figure…so much so that he ruled with the league.

  • The NFL argued at the hearing that the jury used discounts — not the price consumers and business owners paid for Sunday Ticket to come up with the award amount.

  • This is a massive win for the NFL as the league lost a jury trial in Los Angeles just a few weeks ago. And according to federal antitrust law, the $4.7B in damages would increase to $14.1B.

  • To review, the litigation had two different classes that included 2.4M residential subscribers and 48,000 business customers who subscribed to Sunday Ticket through DirecTV from the 2011 through 2022 seasons.

In a dumpshell…this couldn’t have gone any better for the NFL and for Commissioner Roger Goodell’s legacy. Not only will the league not pay billions of dollars in damages, but they won’t have to change their Sunday Ticket arrangement, by letting consumers buy smaller and cheaper packages, or by allowing them to pay less than $349/year (price of Sunday Ticket, which gives access to all games) for access to games in one conference or division.

Overall, Gutierrez’s ruling means that Sunday Ticket, as designed by the NFL, is legal under antitrust law.

It’s pretty crazy to think after a 3-week trial and jury ruling that the case would flip on its head completely and favor the league instead of former and future customers. But guess that’s why football is king 👑.

🟡 Sports bundle prices released. Wait so you’re telling me you guys haven’t been tracking this news religiously? The ultimate sports bundle we’ve been waiting for and you didn’t have notifications set for when pricing was going to drop? Alright, I guess that’s just us then (awk). Yesterday it was announced that Venu Sports, the sports streaming joint venture between Disney's ESPN, Warner Bros. Discovery, and Fox Corp., will cost $42.99 a month (uhhh come again?). The service will stream content with ESPN, TNT, and Fox who have rights with the following leagues: NFL, MLB, NBA, NHL, and men’s college basketball and football games — with the goal of the service being available prior to the NFL season kickoff in early September.

  • Venu will have access to 14 live sports channels and a library of on-demand content from each network.

    • A 7-day free trial will be available to those who sign up, as will the opening price point for the first 12 months.

  • If you went with only Venu Sports and nothing else, what would you be missing out on? Great question! Regional sports networks, NBC, CBS, league networks, most MLS coverage.

In a dumpshell…the price is high, no doubt. But that’s par for the course when it comes to live sports as they remain the highest-rated TV programming and are the most costly part of the pay TV bundle. And it’s no secret all three companies have had issues with cord-cutting in recent years but the big question remains if, and how, Venu will impact their bottom lines — because right now each company will be making less than $15/subscription. And especially with WBD seemingly losing out on NBA rights and not bringing as much to the table in return, begs the question if customers will want to spend this amount.

Because right now a YouTube TV basic subscription costs $73/month and Hulu + Live TV costs $77/month — and the only thing you’re really missing out on with those subscriptions are regional sports networks. So what’s the true value proposition for Venu Sports? It’s something we’ll have to wait and see. Because right now it looks like a very expensive experiment.

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Pictured: Simone Biles

🟢 30 Rock taking over Paris. Move over Simone Biles, Katie Ledecky, and Sha'Carri Richardson, you’re all doing great but the network showing your success has been thriving this Olympics. According to Bloomberg News, NBCUniversal is set to surpass $1.25B in ad revenue for the Paris Olympics, a record for the network which has held the rights to the Summer Olympics since 1988. Prime-time viewership over the first four days averaged 33.8M (+77% from the Tokyo Olympics in 2021). Although, this year’s Olympics continues to be fascinating, it can’t be overstated that Paris has the benefit of a more favorable time zone for U.S. viewers. But the ad sales are what’s really been interesting…

  • Back in April, the network sold $1.2B worth of ad time, so to exceed that number already is quite impressive.

  • About 25% of ad revenue was from ads for digital platforms — which ends up being more than double Tokyo’s sales + a new record for Olympic viewing.

    • According to NBCU Chair of Global Advertising and Partnerships Mark Marshall, that share should grow to 35% to 40% by the Los Angeles Games in 2028.

    • NBCU even said said on Tuesday that it now had ~$500M from new sponsors and captured more advertisers in total than the combined rosters of its Summer Olympics from Rio and Tokyo.

  • What’s even more impressive and the key behind the increase in ad revenue + increase in viewership is that NBCU has begun selling off more ad inventory that had been held back as a hedge against potential under-deliveries.

In a dumpshell…we saw this same kind of playbook occur in the 2012 London Games where ratings exploded early selling its reserved inventory in scatter (all of the advertising inventory that is not bought at the Upfront — start of sales periods) about a week into the event. All that to say, the bonus London sales generated an additional $200M.

This year, if NBCU ends up selling the same amount in excess inventory as London, they would end up selling $1.45B in advertising revenue! But don’t expect that to be the same number, as 2012 was all over linear TV (basic cable/broadcast channels). Now we have to account for Peacock, which has been thriving in their own right as Tuesday’s coverage was streamed by ~5M viewers.

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