The NFL announced Tuesday that it is selling the bulk of its media assets, including NFL Network and the linear rights to the RedZone Channel, to ESPN, confirming a Friday report that the league was parting with them in exchange for a 10% equity stake in the network.
The NFL and ESPN announced the deal — which still requires approval of regulators and league owners — with boilerplate statements from commissioner NFL Roger Goodell and Disney CEO Bob Iger. A statement from New England Patriots owner Robert Kraft to NFL.com shed further light on the league’s motivation for the sale.
“I think we’ve hooked up with the best partners we can have,” Kraft said, per NFL.com. “That will help expose us to more homes, more of an international audience.
“Strategically, we have to grow our salary cap and can only do that by — if we want to keep labor peace, we have to grow our audience. This transaction helps us to do that.”
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So, per Kraft, increasing salary cap demands from players require new revenue streams and, therefore, a larger audience. The deal aims to provide that expanded audience and to allow the NFL to continue to grow its footprint as the dominant player on the U.S. sports landscape.
Conflict of interest concerns loom
The deal also raises conflict of interest concerns in terms of the the NFL owning a substantial stake in the network that covers it most. With the deal complete, the most powerful U.S. sports league now owns a 10% stake in the world’s most powerful sports network that dedicates considerable resources to covering the NFL.
For ESPN, the deal brings a valuable network of dedicated NFL media under its umbrella, most notably shared rights to NFL RedZone, the league’s popular Sunday broadcast that shows multiple games at once.
Per the announcement, ESPN will “own broad rights to RedZone” and distribute it to pay TV operators. The NFL will continue to operate and produce the RedZone channel and will maintain the rights to distribute it digitally, according to ESPN. ESPN will also own and operate NFL Network.
In addition, ESPN will acquire the rights to three more games per season, the joint statement announced. NFL Network will continue to broadcast seven games per season. ESPN will also gain the rights to the NFL’s fantasy football platform and merge it with its own.
NFL will retain control of NFL Films and NFL.com
ESPN chairman Jimmy Pitaro touted the consolidation of media platforms as creating “a premier destination for football fans.”
The deal was announced a day before ESPN’s parent company Disney is scheduled to report earnings. It also arrives on the heels of a spring announcement that ESPN will offer a $29.99 per month standalone streaming service to consumers that’s independent of cable, satellite or streaming packages. NFL Network will be incorporated into that service, which is scheduled to launch in early fall.
