As the linear television ecosystem crumbles, does the National Football League need to consider a dramatic move to ensure it has ample viewers in the future?
Needham analyst Laura Martin made the case Monday for why the NFL should buy ABC from Walt Disney Co.
DIS,
which reportedly is contemplating shedding some of its traditional television assets.
“The NFL is standing by and witnessing the destruction of the linear TV ecosystem, with its powerful economics that largely flow to the NFL and other sports leagues,” Martin wrote. “The NFL is fiddling while Rome burns, in our view.”
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Martin figures that NFL executives see a safe viewership situation over the next nine years owing to their current contractual relationships, but the bankruptcy of Diamond Sports Corp posed problems for Major League Baseball and is a cautionary tale for the NFL, in her assessment.
Beyond that, she questions how robust the bidding will be for NFL rights come 2032. Amazon.com Inc.
AMZN,
could end up the only bidder, she reasons, given that Disney has outlined a 10-year plan for robust theme-park investments while Paramount Global
PARA,
and Warner Bros. Discovery Inc.
WBD,
“are too small and too over-levered” to outbid Amazon.
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“A single bidder is always bad for content-creator economics because that distributor has many incentives to bid low,” Martin wrote. “More granularly, [Amazon] Prime Video would be a bad buyer for the NFL (our view) because Prime Video primarily reaches rich US homes (>$75K median US household income) that also buy e-commerce goods.”
She thinks that the NFL should strive to reach all viewers and take steps to avoid being “held hostage” by a distributor down the line. “If the NFL buys ABC from [Disney] (or CBS from Paramount), that would guarantee its reach into 100% of US homes for the long term,” she said.
At its core, she wrote, “content without any distribution is worthless, no matter how good.”
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