NFL STANDS TALL ON TELEVISION LANDSCAPE

One of the big issues in our industry today is the future of sports on television.

The media landscape has changed dramatically in recent years. New technology has spread today’s media consumers across an expanding array of television channels and other forms of distribution. Fans can experience sports in so many new ways, including the Internet, digital cable, satellite TV, pay-per-view, video-on-demand, video games, and digital videodiscs. As part of this growth, the number of television channels has risen from a handful to hundreds.

The proliferation of choice has divided the audience and created a new media terrain for the sports industry.  Satellite TV now serves 20 million U.S. subscribers with 400-plus available channels. Dozens of channels are available from traditional cable TV hookups, and digital technology now brings hundreds of other cable channels to 20 million U.S. homes. The number of cable networks with a reach of more than 80 million homes has grown since 1999 from zero to 27. This new landscape has increased the challenge for all sports organizations to maintain their media audiences and the revenue that supports their sport.

In recent years, much of sports television has migrated to cable with its dual revenue streams of advertising and subscriber fees. In some instances, this may be attractive from a revenue standpoint, but it brings disadvantages of various types, including the potential shrinking of audiences since broadcast television reaches more homes than cable.

We are the only sports league that televises all of its games on over-the-air television, including carriage of our ESPN prime-time package on broadcast television in the home markets of the two participating teams. The contracts with our four network television partners – ABC, CBS, ESPN, and FOX – currently give us unprecedented exposure on broadcast TV, and they run for another three seasons. But we are analyzing the future of the NFL on television.

It is difficult to predict in a precise way our future television patterns, but we do know one thing: even in this new media landscape, the NFL is special and delivers by far the strongest television programming in sports.

Our league is more competitive than ever; we have expanded to 32 teams; and our television ratings increased last year at a time of general ratings decline as audiences have become more fragmented. Compared to other programming, the value of our games to television keeps growing stronger.

Our mission is to present the NFL and its teams at a level that attracts the broadest audience and makes NFL football the best sports entertainment in the world. Even in the face of these new challenges, we may have a unique opportunity to continue to be the dominant presence on broadcast television with the type of mega audiences that can only be reached in that way.      

This does not mean we will overlook opportunities to change and improve -- to reshape our TV packages, to assign games to different time slots to reach broader audiences, and to use flexible scheduling concepts. In recent years, we have added the Thursday night kickoff of the season, strengthened our late-season prime-time programming, and moved playoff games to later in the day, including primetime, when more people are watching television. We will continue to challenge the status quo.

We expect to maintain a strong presence on cable and in other forms of distribution. Our Sunday night games on ESPN along with ESPN’s other NFL shows have been very successful. The list of the highest-rated programs on cable television is dominated by NFL games. We will use other types of distribution, including our Sunday Ticket satellite package and the new NFL Network, to support and supplement our basic network packages.

We do not know at this time what the specific arrangements will be in 2006 when our next set of TV contracts begins. All we know is this: the NFL is television’s MVP (most valuable property) and NFL fans will continue to enjoy broad access to NFL games and all of our other programming.