The knock-on effects of the recently struck mega-deal between ESPN and the NFL will be wide-ranging. That much we know.
But so far, no one knows exactly what the NFL’s motivation was for taking a 10% equity stake in ESPN. There are, of course, the obvious reasons. Influence over the network’s coverage, owning a piece of the country’s preeminent sports media company, etc. But according to one prominent media analyst, the strategy likely runs far deeper.
Matthew Belloni of Puck recently described the ESPN-NFL deal as “an unsubtle middle finger to Big Tech.” Why? Belloni believes that by taking an equity stake in ESPN, the NFL is helping prop up one of Big Tech’s biggest competitors for live sports rights, thereby ensuring a robust marketplace for the league’s media rights when its current deals expire. The Puck co-founder and former editorial director at The Hollywood Reporter cited media research firm MoffettNathanson in his recent newsletter about the topic.
“For a league that plans for the long-term (in decades, not just years), strengthening an existing partner against digital bidders is something of significant value to the league, ensuring there should be continued healthy competition for future NFL rights,” the firm wrote.
This logic adds up, and is precisely why Puck’s John Ourand recently reported that the NFL could look to renegotiate its media deals with CBS and Fox before its widely expected opt-out in 2029. As the inexorable decline of the cable bundle continues, so too do legacy networks like CBS and Fox. By 2029, there’s no guarantee that either network will be in the financial position to compete with the Big Tech companies like Netflix, Google, Amazon, and Apple for NFL rights. That’s a problem for the NFL if the league wants to maximize its revenue.
Without the legacy networks being in a strong enough financial position to pressure the tech companies, the NFL risks getting a smaller revenue increase from rights fees than it otherwise could get if the legacy networks could compete with Big Tech. In other words, the NFL has a vested interest in keeping the legacy networks strong to increase competition during its next round of media rights negotiations.
Taking an equity stake in ESPN accomplishes just that. If the NFL has anything to do with it, the tech companies won’t simply be able to wait for the death of legacy media before jumping fully in with the league; they’ll have to compete with legacy media first.