In stare-down with Big Cable over Pats-Giants, the NFL blinked

It's good that everybody will be able to watch the Patriots try to finish up a historic undefeated regular season on Saturday night. Good, that is, for everybody except maybe the NFL and its own network, writes John Helyar.

Originally Published: December 27, 2007
By John Helyar | ESPN.com

Faster than a Tom Brady-to-Randy Moss slant, Saturday night's Patriots-Giants game has gone from widely unavailable on TV to practically inescapable.

Until Wednesday, it looked as if the Patriots' quest for regular-season perfection would be televised on only the NFL Network (43 million homes) and in the two teams' local markets (10 million homes).

Then NFL commissioner Roger Goodell stepped in. Upon further review, he declared, the game would also be carried on both CBS and NBC, saying the action is "in the best interest of our fans." And he certainly redefined the 2007 holiday season.

The fifth day of Christmas, on Saturday, usually brings the same old five golden rings. This year, it brings a multiplex of Patriots games.

But it's less a gift from the NFL than a punt. As they've tried to make the NFL Network into a TV superpower, league officials have repeatedly miscalculated and faltered. As a result, they've been unable to budge the major cable operators off their position: that the NFL doesn't belong on basic cable systems. The cable companies have either marginalized the NFL Network on a premium sports tier (as Comcast has done), or refused to carry it at all (as Time Warner has done).

[+] EnlargeJerry Jones and Roger Goodell
AP Photo/Harry CabluckRoger Goodell and Jerry Jones made their case for the NFL Network in the Texas statehouse earlier this month, but it hasn't helped.
If the league was ever to enjoy any negotiating leverage in this standoff, it was seemingly with the much-anticipated Pats-Giants game. The thinking was that Big Cable would take heat from fans eager to see whether New England could complete a perfect 16-0 regular season, and perhaps have to come off its long-held position that too few of its customers give a hoot about the NFL Network to give in to the NFL's demands: a place on their systems' "extended basic" plans and a hefty fee of 70 cents per subscriber.

Turns out it was the NFL owners, not the cable guys, who wound up taking most of the heat for the game's limited TV availability. With the pocket caving in around him, Goodell was reduced to trotting out a goodwill public relations gimmick. He ordered up the first three-network simulcast in league history and the first simulcast of any game since Super Bowl I in 1967.

The Comcasts and Time Warners of the cable world are laughing up their sleeves. They still haven't budged off their positions, and it looks as if they might never have to. Meanwhile, the John Kerrys and Patrick Leahys of the Washington world are congratulating themselves. Those two senators, along with other Capitol Hill pols, exerted political muscle on the league until Roger Goodell said "uncle."

The NFL Network remains mired in as frustrating a run as the Miami Dolphins (the 2007 -- not the 1972 -- version). You might call this the business equivalent of "three-and-out": a series of no-gainers that led to this week's punt.

Let's grab the Telestrator and break down the broken plays:

1. The NFL overvalued its product and its leverage. The four-year-old network's problems started in 2006, when it launched a package of eight Thursday and Saturday night games. The NFL hiked the network's asking price from 20 cents to 70 cents a subscriber, and the battle was joined.

"The NFL has a great belief about its importance in the world of sports," says one veteran broadcast executive. "It was overreaching on price and underestimating its opponents. The big cable companies decided this was where they were going to pitch their tents and fight the rise of sports programming costs."

The league hurt its cause by putting no "must see" game on the NFL Network's 2006 schedule. Compared to the Packers-Cowboys game on Nov. 29 this year, and the Patriots-Giants game this coming Saturday, there were no matchups to stir a public outcry. The network's Web site had an "I want my NFL Network" page, telling fans how to pressure their cable systems to carry the channel. But there wasn't enough of a fan uprising to make the cable operators cave.

2. The NFL, which is accustomed to being in the driver's seat on TV matters, mistakenly believed it could control this one, too. It commands top dollar for its prize content -- a 53 percent rise in the latest round of broadcast deals -- which delivers $3.7 billion a year to the league.

But in the case of the NFL Network, it has only eight games a year to sell. The vast majority of the network's hours are filled with league news, game highlights and analyst chatter. The big cable operators weren't buying the value of that, but some serious horse-swapping might have brought them around.

Consider the situation last spring with Major League Baseball. It, too, was at swords' points with the major cable operators after MLB sold exclusive rights to its "Extra Innings" package of out-of-market games to DirecTV, a satellite-only service that left cable subscribers out of the picture. But MLB made peace -- and got itself broad cable carriage -- by selling a piece of its forthcoming MLB Network to Comcast, Time Warner and Cox.

The NFL refused to give the cable operators a stake in the NFL Network. Nor has it been willing to cut the cable guys in on the Sunday Ticket package, now exclusively seen on DirecTV.

League officials maintain the other side is the intransigent one. In the simulcast announcement, NFL Network CEO Steve Bornstein said, "A few of the biggest cable operators have refused to negotiate." Alex Dudley, a Time Warner Cable spokesman, rejected that as "fairly absurd. We've offered the NFL several different options, none of which they found appealing."

3. The NFL incorrectly counted on the government to aid its cause. Starting last month, league officials, owners and lobbyists have been working the case on multiple fronts. The league has backed a proposal by FCC chairman Kevin Martin that would give independent programmers such as the NFL Network a better shot at cracking the major cable TV systems.

The Dallas Cowboys' Jerry Jones, who heads the owners' NFL Network Committee, has been flitting around to various state legislatures, urging them to help the NFL Network's cause by rewriting cable TV regulations. Goodell even appeared with Jones at a hearing on the subject conducted by Texas legislators.

Given its strategy of government intervention, the NFL at first seemed to embrace Sen. Kerry's proposal, in a Dec. 6 letter, urging the league and the major cable operators to negotiate. Otherwise, Kerry wrote, millions of fans would be unable to watch the potentially momentous Dec. 29 game featuring his home state Patriots.

Responded NFL spokesman Greg Aiello: "Commissioner Goodell welcomes the senator's comments because we, too, want broad distribution for NFL Network."

But Kerry's letter failed to jump-start negotiations. Comcast maintained it is in the middle of a multiyear contract to carry the NFL Network on its sports tier. There was nothing to negotiate. Time Warner rejected Goodell's offer of "baseball style" arbitration: letting a neutral party decide what the cable giant should pay for the NFL Network.

As the date of the Patriots-Giants game approached, more of Washington's political heat was being directed at the NFL. Senate Judiciary Committee members Leahy, D-Vt., and Arlen Specter, R-Pa., threatened hearings on the antitrust exemption that the NFL enjoys for broadcast purposes. On Monday, Kerry wrote Goodell a letter strongly suggesting that the game be put on NBC. Otherwise, he said he'd seek Senate hearings on "how the emergence of premium sports channels are impacting the consumer."

Two days later, Goodell put the game on two broadcast networks. All of which still leaves the NFL at fourth-and-longer-than-ever. The commissioner maintained, in his announcement, that "our commitment to the NFL Network is stronger than ever." Spokesman Aiello believes Saturday's simulcast will boost the network by exposing millions more fans to "the quality of the production."

But, to lapse into coachspeak, the network's game plan seems desperately in need of adjustments. Would Bill Belichick ever stand for "3 yards and a cloud of futility"? How much longer will NFL owners?

John Helyar is a senior writer for ESPN.com and ESPN The Magazine. He is the author of "Lords of the Realm: The Real History of Baseball."

John Helyar

Sports Business
John Helyar is a senior writer for ESPN.com and ESPN The Magazine. He previously covered the business of sports for The Wall Street Journal and Fortune magazine and is the author of "Lords of the Realm: The Real History of Baseball."