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Bob Ford

Comcast comes out ahead in deal with NFL

Wow, what a relief that the NFL and Comcast were able to reach a deal about which shelf should hold the league's network in the fabulous digital cupboard of the nation's largest cable provider.

I was a little worried there that one of these big old fellas was going to lose money.

But, apparently, everything has been smoothed over and - here's the good news - the NFL and Comcast are really just looking out for the best interests of you, the consumer.

Brian Roberts, the CEO of Comcast, and a guy who can sure string together a mellifluous sentence, said the agreement "struck the right balance between value and distribution on a variety of viewing platforms."

Oh, man. What John Facenda wouldn't have done with that. Kind of sends shivers up your spine.

The right balance between value and distribution in this case, for both these entities, involves the concept of "how much can I charge for the beans in my hand before the customer calls baloney?"

It's a delicate business, and Comcast held the biggest crowbar throughout this particular dispute with the league. If you want a final score from yesterday's announcement, it was something like: Comcast 34, NFL 10.

There is very little profit in having a television network if no one gets to see it. That was the whip Comcast held over the NFL's head when it moved the network from its regular digital tier of programming to its special sports package, cutting out 80 percent of the viewership.

Advertisers don't think much of paying good money for ads that reach only a small audience, and the NFL Network was taking a financial bath while it tried to beat Comcast in the courts. The first set of lawsuits were filed in 2006 and they were still gummed up in the appeals process - as was a pending complaint being considered by the FCC.

If nothing else, both sides have lawyers, and even if there would be a legal resolution to this catfight, Comcast had the ability to drag it out until the NFL had to call a time-out, and not just a 30-second time-out, either.

Comcast contends, perhaps rightly, that the NFL was out of line in what it wanted to charge cable providers per customer to televise the network. Previously, it was 80 cents per customer or thereabouts. The new deal calls for a charge of just 40 cents per customer.

So, let's do some math, which is always dangerous for a sportswriter, but this is a dangerous game. We're talking sports, so these are ballpark numbers.

The league was getting that 80 cents per customer per month from the two million sports tier subscribers, or $1.6 million. Comcast charges them between $5 and $8 per month for the tier. Not all subscribers were there for the NFL, of course. Some were there for the other offerings, like the NBA Network, NHL Network, Tennis Channel, college sports channels, and so forth. But probably a lot of them were there for the NFL.

Under the new deal, Comcast will send approximately $4 million to the league for the roughly 10 million digital subscribers who will now get the NFL Network at a cost of 40 cents a pop to the cable company.

OK, so that means more money for the NFL and more exposure, and, one would surmise, more ad revenue. So where is the 34-10 loss? You have to remember that the NFL wanted, and went to court to get, about $8 million a month from Comcast, and settled for $4 million. And now the lower-priced template has been set for all the cable providers across the country, not just Comcast.

If Comcast has slightly higher operating costs as a result of the deal, that will still work out fine. If you dig through the rate structures of the Digital Starter, Digital Preferred, and Digital Premier offerings for the next year or so, the answer will be in there somewhere. Also, a fair number of those NFL fans who signed up for the sports tier will keep getting it, either by intent or inattention. Either way, they'll still be billed.

This is win-win for the cable side of the field. Comcast won't have the NFL pestering the FCC, looking for an explanation as to why the Comcast sports channels like Versus and Golf Channel are on the basic package - meaning more viewers and higher ad revenue - while other people's programming is put behind an expensive wall.

It's one thing for a supermarket to stock its own brands prominently and hide those of its competitors. The owner can shrug and say, "Go to another supermarket."

When there is only one cable company to deal with, however, and that is how it does business, the government usually calls that "monopolistic behavior," and if you can weave through the broken field of the courts and get to the end zone, you can win that case.

The NFL couldn't avoid the tacklers this time and finally had to punt.

Don't feel too sorry for the league boys, though. They'll get the ball back eventually.


Contact columnist Bob Ford  at 215-854-5842 or bford@phillynews.com.

Read his blog at http://philly.com/postpatterns.

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