Why the NFL’s Media Deals are Skyrocketing despite Viewer Numbers Stagnating

Media deals in the NFL have been increasing in value despite stagnant viewer numbers. This can be attributed to several factors. One reason is the scarcity value of live football, which allows advertisers to reach a large and diverse audience all at once. Additionally, the TV networks believe they can make more money from the media rights due to higher ad rates. Another factor is the lack of alternative content that networks have, making them reliant on the NFL for viewership. As a result, the NFL has been able to negotiate more favorable terms and capture a larger share of the profit pool. The networks' margins have become thin, and the profit is now being accrued by the content creators rather than the distributors. This phenomenon is similar to what happened in the airline industry, where margins were competed away, leading to mergers for scale. The media companies buying the rights, which are now massive combinations, can afford to generate any margin. However, the unit economics of buying NFL rights and selling ads against them have likely worsened over time. Despite this, the NFL benefits from outsourcing and commoditizing the production, distribution, marketing, and advertising processes, allowing them to keep the vast majority of the profits.