Little progress on NFL channel deal

NEW YORK Mon Dec 1, 2008 7:27pm EST

Eric Grubman, executive vice president with the National Football League and president of NFL Ventures and Business Operations, speaks at the Reuters Media Summit in New York, December 1, 2008. REUTERS/Brendan McDermid

Eric Grubman, executive vice president with the National Football League and president of NFL Ventures and Business Operations, speaks at the Reuters Media Summit in New York, December 1, 2008.

Credit: Reuters/Brendan McDermid

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NEW YORK (Reuters) - The National Football League and top cable companies are holding only sporadic discussions about deals to broaden distribution of the NFL Network, and it is unlikely any agreements will be reached anytime soon, a top official from the league said on Monday.

The NFL Network, which broadcasts eight football games each season along with original programing and highlights, is now available in only about 43 million homes through a number of smaller cable companies. The NFL has yet to reach agreements with some of the top cable companies, including Time Warner Cable Inc and Cablevision, and the NFL Network has fallen short of the league's initial projections.

Eric Grubman, executive vice president with the NFL, told the Reuters Media Summit in New York that the U.S. sports league is holding talks with the big cable companies "from time to time" but said he did not expect any deals this year.

"We're disappointed at not being able to crack the barrier of the big cable networks," the league's top business executive said. "We think that the merit would suggest that the people want it, that it rates well, that the critics love it. What's left is to reach agreements with some big providers."

Time Warner Chief Financial Officer Rob Marcus said in an earlier session that his company had not held any material discussions with NFL since the 2007 football season. "It's really all about money."

Either the NFL had to come down on its financial demands on the basic tier or agree to a premium tier for which consumers would pay a higher price, Marcus said. There is not enough content otherwise to justify paying the asking price of the NFL, which must take the next step to jump-start talks.

"This is a network that's essentially based on eight football games and San Diego Charger cheerleader tryouts," Marcus said. "There's not a lot else on there."

Grubman called Marcus's comments "not fair" and said the NFL Network is young, growing and boasts strong TV ratings.

"We don't think that our requests are out of line," he said. "It doesn't make strategic sense to not have the NFL. They want it. They just want it at a price that is disproportionately beneficial to them."

Expansion of the NFL regular season by a game or two from its current 16 games was still under consideration, but no consensus had been reached among owners and any changes would not happen until the 2011 regular season at the earliest, Grubman said. He added, however, that the additional games could provide added content for the NFL Network.

The weak U.S. economy has hurt the NFL just like any other business, raising such costs as stadium financing, while also hurting ad, sponsorship and consumer spending, Grubman said.

"Our revenue reduction is quite small, but it looms large because the margins at the National Football League in total are not enormous," he said. The NFL's revenue last season topped $7 billion.

So far, ticket sales are running about 1 percent behind last year's record attendance of 22.3 million.

"The no-shows are up a little bit," said Grubman, adding the slowdown's real impact may not be felt until next season.

Requests by companies to modify sponsorship deals are no different from other years and the NFL weighs such requests based on whether they make sense for the league long term. It has already cut a "substantial" amount of its travel and entertainment, and promotional spending.

However, Grubman said the sport was insulated in the short to medium term by its TV deals, which generate about $3.7 billion a year. The sport's popularity also offers protection.

"We are a giant platform, a giant billboard. That giantness is real strength," he said. "I like our chances in this market."

Steve Lanzano, chief operating officer of MPG North America, a unit of the French advertising group Havas SA, agreed the NFL remains prominent in the ad market despite some TV commercial spots for the postseason remaining unsold at this point.

"It might take them longer to get those spots to be sold, but I think they'll ultimately sell them out," he said at the summit. "Football is still a premium property."

Grubman does not see the weak economy forcing owners to capitulate on a desire to rework their labor deal with the players' union.

In May, the 32 owners opted to end the current contract with the players early in a move to cut costs. Grubman said the August death of union chief Gene Upshaw makes progress on material issues unlikely in the near term.

Officials with the players union have warned of a lockout by owners, but Grubman suggested both sides would lose if games were not played.

"There's no good time to have a lockout or a strike," he said. "The fans don't care what the arguments are from either side. They want to see football."

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Ben Klayman and Paul Thomasch; editing by John Wallace, Phil Berlowitz and Bernard Orr)

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