Wall Street Reacts to NFL Deals: "The End of the Bundle as We Know It"?

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"The NFL is following the path we have seen first in scripted TV, then original films, followed by kids and unscripted content, and increasingly news and now sports," writes one Wall Street expert.

"Mark it down. March 18, 2021 is the day the multichannel TV bundle died." LightShed Partners analyst Richard Greenfield didn't hold back in his Friday report about the new slate of NFL rights deals unveiled Thursday with Walt Disney/ESPN, Comcast's NBCUniversal, Fox Corp., ViacomCBS and Amazon, which includes increased streaming options.

"Sure the bundle will be around for many years to come, but the future trajectory is now clearer than ever and the proverbial 'floor' on multichannel video subscribers is far lower than we predicted," Greenfield wrote in the note titled, "The End of the (Multichannel TV) Bundle as We Know It." "What we thought was a 40-50 million subscribers floor due to the NFL is probably now closer to 20 million, as more and more marquee sports content (especially NFL content) becomes available outside the legacy multichannel bundle."

Bernstein's Peter Supino called the new rights deals "an excruciatingly expensive victory for the media establishment in its fight to preserve the sports business model while bolstering their streaming platforms." And he added: "While Amazon Prime has previously streamed NFL games at modest cost, buying Thursday night for $1 billion a year is a historic step which should sack any remaining hopes that broadcasters would always be the best buyer of banner sports rights."

Morgan Stanley analyst Benjamin Swinburne's report, titled, "NFL Agreements Attempt to Balance Lucrative Past with Streaming Future," also focused on the future of linear and streaming football and other content.

"While consumers are shifting to streaming, the linear bundle remains the financial underpinning of the NFL," he wrote. "These agreements attempt to migrate the NFL to streaming by giving existing broadcast partners the digital rights and term (10-11 years) to manage an uncertain financial transition."

But he also highlighted: "The key theme consistent across the deals is the additional streaming flexibility all broadcasters have secured, paving the way for NFL programming, including games on ESPN+, NBC's Peacock, Paramount+, and Fox's Tubi. Of course, shifting Thursday Night Football to Amazon Prime Video puts an even more emphatic point on the streaming future."

The Wall Street expert sees that in sync with broader industry trends. "From House of Cards to Monday Night Football, there's no turning back now," he argued. "The overall takeaway is that the NFL is following the path we have seen first in scripted TV, then original films, followed by kids and unscripted content, and increasingly news and now sports. In essence, the industry is devaluing the linear bundle and investing aggressively in individual streaming services. This has led to increased levels of cord-cutting but rapid uptake in streaming."

Greenfield predicts various streaming offers of NFL games, including from Fox. "The stage is now set for them to launch a subscription tier on Tubi that includes NFL programming (similar to Paramount+’s base tier, we do not expect affiliates to participate in the subscription economics)," he wrote. "Plus, similar to Pluto TV, we expect shoulder programming and/or a limited number of games to appear on the free, advertising VOD version of Tubi."

How will this end? "In 2021, the industry is clearly in the land-grab phase for consumers, leading to rapid top line growth but a dramatic drop in profits," Swinburne argued. "Most likely, many of these streaming services will fail to scale — leading to inevitable but necessary consolidation. In the very long-term, we continue to see technology as expanding the pie not shrinking it. This has been the case in prior cycles, from broadcast to cable, cable to satellite, and now to internet TV. By the end of these agreements in 2033, all we know for sure is the landscape will look dramatically different than it looks today."