Double Jeopardy: TV Faces the Abyss with NFL and NBA Player Lockouts

Billions of dollars and hundreds of ratings points are at stake. The scary part? It looks right now like both lockouts are really going to happen

Last Updated: March 13, 2011 @ 8:18 PM

Think CBS losing Charlie Sheen is bad? Try losing the NFL and the NBA at the same time — that’s much, much worse.

That prospect grew more likely on Friday when the players union for TV's biggest ratings driver, the National Football League, decertified, allowing players to file a class-action anti-trust suit against the owners.

Meanwhile, the National Basketball Association is also headed toward trouble, with a new contract between players and owners looking unlikely before the next season starts in October.

Scary? We’ll say. Broadcasters are facing the very real prospect of having two major sports leagues sidelined this fall due to simultaneous labor disputes, putting billions of dollars in advertising at risk as the the media industry heads into the critical up-fronts season.

“Networks could get hurt even if all the games ultimately get played,” one top TV sports executive told The Wrap Sunday, explaining that media buyers will shift their dollars by summer if no resolution has been reached. 

The hit to the NFL puts $3 billion in danger for NBC, CBS, Fox and ESPN, the ad spend during the 2009-2010 season.

The potential stoppage in the NBA is an estimated $1 billion risk for ABC, TNT and ESPN.

Both sports leagues have precedent of labor strife: in 1987, before it was half the ratings powerhouse it is today, the NFL lost an entire season due to a lockout; and the NBA sacrificed half of its 1998-99 campaign because of one.

Never, however, have two major sports leagues stopped the action at the same time.

Negotiating over a $9 billion pie, the NFL players and owners are said to be only about $200 million apart in terms of reaching a new collective bargaining deal. But with Friday's action, there's growing doubt that they will bridge that gap before the new season kicks off in early fall.

As for the NBA, owners are crying poverty and pushing hard to lower the NBA salary cap, which the players union doesn't seem close to embracing. With its collective bargaining agreement set to expire at the end of June, few believe a new agreement can be locked in before the next hoops season starts in October.

The consequences for the media business could be staggering.

Nothing on television draws ratings and advertising dollars like the NFL, which is coming off a record-breaking Super Bowl performance last month that drew a staggering 111 million viewers.

In the 2009-10 season the NFL generated nearly $3 billion in advertising revenue for its four biggest broadcast partners, CBS, ESPN, Fox and NBC, aaccording to Kanter Media.

Fox grossed the most revenue that season, $944 million, followed by NBC ($817 million), CBS ($804 million) and ESPN ($144 million).

Ratings-wise, NBC's primetime Sunday-night game was the network's only program to crack the top 20 this year, averaging 21.9 million viewers a game.

Fox (which, like CBS, shows most of its games during the day), averaged 20.7 million viewers, while CBS averaged 18.7. On cable, ESPN averaged 14.7 million for its Monday night game.

With its lock on primetime Sunday night games, fourth-place NBC would absorb the most damaging blow from a cancelled NFL season, rival television executives note.

With its lock on primetime Sunday night games, fourth-place NBC would
absorb the most damaging. The football programming carries the Peacock network thorughout the third and fourth quarters. NBC's most uncharitable rivals suggest football is all but the network's only surefire draw.

“Without football for that leverage, NBC is weakened” in terms of ad sales, one rival sports executive contends.

Still, no football network will escape harm. CBS and Fox, for example, each have nine double-header Sunday games. Starting around 4 pm, the second game effectively is the lead-in programming for primetime that delivers a spiked viewership for “The Simpson’s” on Fox and “60 Minutes” on CBS.

The loss of the lead-ins undoubtedly will impact those important shows.

Even if the owners and players settle their difference before the scheduled start of the season, the clock is ticking down toward the TV’s industry May upfront, where billions of ad dollars are committed for the fall television season.  If advertisers are doubtful that a 2011 NFL season will come to pass, they could decide to spend their budgets elsewhere.

 “Advertisers have to find eyeballs because they have new cars to move, movies to open at a certain time and just products to sell,” one network executive said. “There’s nothing to replace NFL football, but advertisers will be obligated to do their best to find alternatives.”

One obvious option is perhaps to spend more in primetime, which could drive up rates and reduce inventory for the scatter market, television ad executives suggest.

Fox, for one, seems to be a strong position with alternative programming to manage its way through a cancelled season. The highly anticipated “X-Factor” debuts in the fall, and the network also has post-season baseball games on its schedule.

The ripple effects will extend into local television markets. For example, if the networks were to fail to come up with nationally-televised alternative programming to replace the NFL, the time reverts back to the local stations.

DirecTV, meanwhile, which offers NFL games on subscription package, will stand to lose around $650 million in the third quarter alone, according to a statement released by Barclays last week.

For their part, ad agencies and their clients will find upfront planning exceedingly difficult, especially if the season remains in limbo through the spring.

Advertisers Anheuser-Busch and PepsiCo, meanwhile, have each ponied up for $1 billion multi-year NFL sponsorships, that include next season. Where do those dollars go if there isn't a season?

Of course, the situation gets more complex with NBA's possible work stoppage.

While not on par with the NFL in terms of ratings and dollar might, the NBA's ratings have been surging of late. Advertising Age predicts the loss to the hoops league's broadcast partners could be $1 billion if the next season doesn't happen.

The impact of a dual lockout would affect Disney the most, since it's the only conglomerate to have a broadcast contract with both the NFL and NBA.

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