By: Hayden Gramolini
Broadcast rights have been one of the largest sources of revenue for professional sports leagues for a very long time. The shift in the means of consumption of content has slowly caught up to these lucrative broadcast rights and the market has just had a major domino fall towards digitalization of sports broadcasting.
On March 18, 2021, the NFL announced a new set of television deals with multiple networks through the 2033 season worth a reported $110 billion. While a large number of these agreements were essentially extensions, there were two pivotal changes in the deals. First, ABC bought the broadcast rights to two Super Bowls during the term of their agreement as part of its $2.7 billion annual fee to broadcast games. Until now, Fox, CBS, and NBC rotated the right to broadcast the Super Bowl every year. ABC, and really its subsidiary ESPN, joining the arrangement is a significant moment in broadcast history as the Super Bowl is perennially the most watched television event of the year. The Super Bowl is an advertisement revenue machine to the point that a single 30 second advertisement during the Super Bowl is worth a reported $5.6 million. ESPN clearly sees the value in this revenue stream as it just paid a substantial amount of money themselves.
Secondly, Amazon Prime will now have broadcast rights to the weekly Thursday Night Football game. Thursday night games have rotated between the NFL Network, Fox, and a select number of games on Amazon Prime over the last decade. Amazon Prime now having weekly broadcast rights for Thursday Night Football marks a seminal moment in sports media as for the first time, there will be a regularly scheduled football game every week that is not available on television. NFL Network will be able to simulcast select games but to cord cutters’ rejoice, one game a week will be streamed through the Amazon Prime App.
Broadcast rights are a type of license sold to a media company to distribute content to the public. A license is defined as “The permission granted by competent authority to exercise a certain privilege that, without such authorization, would constitute an illegal act, a trespass, or a tort.” Broadcast licenses have long been a source of revenue for sports leagues and other entertainment companies but were traditionally limited to television networks. They are bargained for provisions in contracts between companies and in professional sports, are the main financial safety net for the stability of the league and its players.
The new NFL agreements outline a few significant changes in the tech law market. First, ABC being willing to pay $2.7 billion a year to broadcast two Super Bowls and retain its current broadcast rights shows that the value of broadcast licenses have never been higher. Sports has truly shifted to an advertisement-based industry and ABC paying that much money just to charge other companies to advertise during those games is evidences the fact. Also, Amazon Prime now regularly showing a game on an app-based platform is a significant shift in the licensing of live sports. While certain tv shows and movies have slowly moved exclusively to platforms like Netflix and Hulu, professional sports were previously reluctant to do so as it was so dependent on traditional viewership. Amazon Prime gaining the license to Thursday Night Football certainly opens the door for similar platforms to join the live sports market.
This also shows that like everything else in society, the value of a license can both grow and change simultaneously. The recent NFL agreements show that both traditional television broadcast licenses and app-based broadcast licenses are worth an exorbitant amount of money. Negotiators on both the league and the media’s side did an admirable job of demonstrating how creativity can be an integral part of drafting licensing agreements by showing that neither just traditional television viewership nor modern app-based consumption alone are the only answers to live sports broadcasting.
By transitioning away from traditional exclusive licensing agreements, content creators are expanding the reach of intellectual property rights. The diversification of content distribution grants substantially more control to intellectual property owners by moving beyond a one stop shop model. Multiple distribution streams offer significantly more options for licensors and therefore more power at the negotiating table. This change in licensing structure will be directly reflected in the drafting of the agreements. Licensing provisions will now likely contain language that grants licenses for the “exclusive digital distribution of content” rather than the wholesale exclusive television distribution previously seen.
While it seems as though the industry is going to use the Amazon Prime deal as a catalyst for more app-based broadcasting moving forward, the agreements really show the sheer magnitude of the profitability of broadcast licensing. Content consumption has never been more in demand and the NFL used creative contractual strategies to provide for traditional television viewers and the cord cutters by adding an additional cable network into the Super Bowl rotation and also broadcasting a game on an app regularly for the first time.
Student Bio: Hayden Gramolini is a third-year law student at Suffolk University Law School and a staff member for the Journal of High Technology Law. He attended Quinnipiac University for his undergraduate degree where he majored in Legal Studies and minored in Sports Studies. He has a strong interest in practicing In-House in the future and recently declared for a business law concentration.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
