This is not something that was unforeseen.
The world of entertainment is changing and the traditional players are going to act like this is 2005.
With the NFL and the Player's Union close to agreeing to a new collective bargaining agreement, the broadcast rights to the games will go up to bid. All parties were waiting for this to be completed before moving ahead with the television contracts. The new contracts will go through 2020.
And it is going to cost a lot more money.
It is expected that the price of the Sunday afternoon games will go from $1 billion to $2 billion. If ESPN wants to keep the Monday Night game, it will have to jump to $3 billion from the present $2 billion.
Rates on Sunday afternoon games may double, jumping from $1 billion annually to $2 billion annually. ESPN pays $2 billion annually for Monday Night Football and may need to pay $3 billion to keep the package, two of the people said. Renewals will likely be seven or eight-year deals, the people said.
There are a lot of other player's who might be looking to get into the game. There are a number of streaming services that could be interested including the likes of Amazon. The NFL does not seem likely to embrace this route at this time.
This is not unexpected.
We are looking at a changing landscape which means that traditional entities are going to need to adjust. Cord cutting has been taking place for more than a decade and only seems to be increasing in pace. The Millennials are not even signing up for traditional broadcast television, instead opting for streaming services.
As people drop their cable services, at least for television, this cuts into the revenues of the service providers. This means they are not likely to pay the fees for the different channels are charging that comes with major deals like this. At some point, they will realize that advertisers are not going to pay as much since the number of subscribers are down.
With streaming becoming the preferred path, this cycle is only going to gain speed. Of course, with contracts like this being negotiated, it seems the warnings are not being heeded.
In the meantime, the NFL is about to come into some big money.
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