DirectTV

Why the NFL Network is using the wrong playbook

November 11, 2010: 12:00 PM ET

Are you ready for some vertically-integrated football?

Last year NFL Commissioner Roger Goodel hailed what he called the NFL's "tradition of being the most pro-consumer, widely available sport on television."  He wasn't talking about Thursdays.

Tonight marks the NFL season's first Thursday night game and fans hoping to watch the Falcons play the Ravens will scour their cable or satellite line-ups to see if they get the rarely-watched NFL Network. While many will be disappointed, the real problems will hit in two weeks, when the New York Jets host the Cincinnati Bengals. Both cities rely heavily on Time Warner Cable (TWC), one of several cable systems that do not carry the NFL Network.

Over the past five years the NFL managed to strong-arm most cable and satellite companies into forking over monthly subscriber fees to carry the NFL Network year-round, a trick it accomplished by holding out a mere eight games a season for the channel's exclusive use, most on Thursday nights. As with other cable networks, subscribers pay the fees: in this case, roughly 50¢ per home, whether or not they want or watch the channel.

On the surface, that might seem like a swell strategy for the league. Why cut the broadcast networks or ESPN in on the profits when you can distribute games yourself? As for getting revenue from people who never watch your product—what's not to love?

Yet even if the league's goal is to wring every dollar it can from its TV rights—and that's just capitalism, after all—its vertical integration strategy seems increasingly shortsighted and anachronistic.

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