Broadcasting, Media Rights, and the Battle for Attention

A stadium places a hard limit on the number of people who can attend a game. Media breaks that limit. A national broadcast can put the same event in front of millions of viewers at once, including fans who live hundreds or thousands of miles from the venue. That larger audience helps explain why broadcasting has become central to the economics of teams and leagues.

Yet the media business now presents a puzzle. Viewers have more entertainment choices than ever: broadcast channels, cable networks, streaming services, social media, video games, podcasts, and an almost unlimited library of on-demand programs. The cable bundle that financed expensive sports networks has lost subscribers. Fans routinely complain that games are scattered across too many outlets. Under those conditions, one might expect the value of sports media rights to collapse.

Instead, major live-sports rights remain extremely valuable. The reason is not simply that “sports are popular.” The more important economic fact is that certain sports—especially NFL football—can still assemble a large audience at the same time. In a fragmented entertainment market, the ability to coordinate attention has become scarce.

That attention does not turn itself into revenue. Leagues and teams control the games, but broadcasters and streaming platforms produce telecasts, distribute them, promote them, sell advertising, collect payments, and bear risk. Media rights are therefore part of a connected market involving leagues, teams, platforms, distributors, advertisers, and viewers. This chapter explains how that market creates value, how the cable bundle divided the bill, why streaming changes the allocation of risk, and why some form of aggregation keeps returning even after consumers appear to “cut the cord.”

Learning Goals

After reading this chapter, you should be able to:

• distinguish media fragmentation from audience fragmentation and sports-distribution fragmentation
• explain why live sports can aggregate scarce, simultaneous attention
• explain why the NFL’s mass audience is unusually valuable to advertisers seeking broad reach
• trace the media-rights value chain from leagues and teams to platforms, advertisers, and viewers
• distinguish the upstream rights market from a platform’s downstream two-sided market
• explain how carriage fees, advertising, and bundling financed sports networks
• analyze how declining linear reach, higher rates, and direct subscriptions interact
• compare bundles, direct-to-consumer services, and emerging re-bundles
• explain what broadcasters and streaming platforms add even when a league could distribute games itself
• compare national and local media-rights models
• identify the reach, revenue, exclusivity, fan-access, and risk trade-offs in a distribution agreement
• evaluate how streaming exclusivity can raise rights value while increasing fans’ access costs
• explain winner’s-curse logic without assuming that every high bid is irrational
• interpret subscriber, audience, and revenue data without mixing incompatible measures
• explain how durable expected media revenue can contribute to franchise value

Attention Is Scarce

Every person has the same twenty-four hours in a day. A new platform can create more programs, but it cannot create more viewer time. The supply of possible content can expand much faster than the supply of attention.

This is the starting point for the modern sports-media market. When households had only a few television channels, an advertiser could reach a broad audience by buying time on a small number of programs. Today the same audience may be divided among hundreds of channels and apps, short videos, social feeds, games, podcasts, and other activities. Reaching ten million people may require many separate purchases, different formats, and repeated attempts to avoid showing the same advertisement to the same users.

Economists should separate two related changes.

• Media fragmentation is the proliferation of outlets, platforms, and content choices on the supply side.
• Audience fragmentation is the dispersal of viewer attention across those choices on the demand side.

A third form of fragmentation matters particularly to sports fans:

• Sports-distribution fragmentation occurs when the games a fan wants are divided among multiple channels, services, packages, or territorial arrangements.

The first two can increase the value of a property that still aggregates attention. The third can make it more costly or inconvenient for a fan to follow a team. A league may therefore benefit from a fragmented entertainment environment while simultaneously worrying that its own distribution has become too fragmented.

Nielsen’s May 2025 television-set data provide one snapshot of the change. Streaming accounted for 44.8 percent of U.S. television use, while broadcast and cable together accounted for 44.2 percent. These figures describe time spent with the television set, not all entertainment time, and they do not imply that streaming is one unified destination. The streaming share itself is divided among many services and programs.^[1]

The contrast with an NFL Sunday is instructive. In October 2025, Nielsen reported that broadcast television’s share of viewing averaged 22.0 percent from Monday through Saturday but rose to 27.3 percent on Sundays. NFL games on CBS, Fox, and NBC were the month’s three leading programs, each averaging more than 20 million viewers.^[2]

The 2025 NFL regular season averaged 18.7 million viewers per game according to the league and Nielsen. The number is impressive, but the measurement warning in Table 5.1 matters: Nielsen expanded out-of-home measurement and began using its Big Data + Panel method during 2025. Part of a change from an earlier season can reflect how viewing was counted rather than a pure change in behavior.^[3] The economically durable point is not one record or one percentage increase. It is the league’s repeated ability to assemble very large live audiences across an entire season.

Why Live Sports Can Still Aggregate An Audience

Several features make live sports unusually well suited to coordinating attention.

First, the event is perishable. A recorded game may remain entertaining, but much of its value comes from not knowing the outcome. Once the result is known, demand for the full telecast usually falls sharply. Fans therefore have an incentive to watch at the scheduled time.

Second, the schedule coordinates viewers. A popular on-demand drama can accumulate a large audience over a month. A football game tells fans to arrive at the same time on the same day. That simultaneity is important to advertisers because it creates a common moment in which a message can reach many people at once.

Third, sports produce repeated events with uncertain outcomes. A scripted series must keep inventing stories. A league generates a new set of contests every week, and the uncertainty is partly supplied by the competition itself. A weak game can disappoint, but the next one arrives on schedule.

Economists call the idea that fan interest may increase when a contest is less predictable the uncertainty of outcome hypothesis. The hypothesis helps explain the appeal of live sports, but it is not a universal law. Fans may also value a likely home victory, star players, high-quality play, rivalries, or even a dominant team. Chapter 8 examines the evidence and the connection between uncertainty and competitive balance.

Fourth, sports are social. Fans discuss a game while it happens, follow it with friends, react on social media, and avoid spoilers. These interactions increase the cost of watching much later. The same behavior that makes the game valuable to fans helps a media partner preserve a live audience.

Finally, a league can create recognizable windows. Sunday afternoon football, Sunday Night Football, and Monday Night Football are not just collections of games. They are recurring appointments. The audience knows when to look, and the distributor knows when attention is likely to arrive.

Why Broad Reach Matters To Advertisers

Digital advertising can target narrowly defined consumers. That is valuable when a seller wants a specific group. It does not eliminate the value of broad reach.

Suppose a national brand wants to make most American consumers aware of a new product. It can assemble that reach by purchasing many small audiences across websites, videos, podcasts, and social platforms. Doing so creates transaction costs. The advertiser must choose outlets, adapt creative material, measure results across systems, control repetition, and estimate whether the same users are being counted more than once.

A large NFL window offers a different product: one purchase can reach a large audience in a shared moment. The advertiser still cares about audience composition, frequency, and whether viewers pay attention to the commercial. Twenty million viewers are not automatically the right twenty million customers. Even so, the ability to obtain broad simultaneous reach from a recurring program is increasingly unusual. Scarcity on the supply side can raise the price of that advertising opportunity.

This helps explain an apparent paradox. Fragmentation can weaken many traditional media properties while strengthening the bargaining position of the few properties that still aggregate attention. The NFL does not escape competition for viewer time. It benefits because so many alternatives divide that time among themselves.

The Media-Rights Value Chain

A league does not usually sell viewers to advertisers directly. It licenses a set of rights to one or more media partners. Those partners then combine the games with production, distribution, promotion, advertising sales, subscription access, and other products.

The main participants perform different jobs:

• Leagues and teams create the contests, control access to the live event, define packages, and decide whether rights are sold collectively or individually.
• Media partners may guarantee a rights payment, produce the telecast, schedule programming, promote the league, sell advertising, and place games inside a larger subscription or platform strategy.
• Distributors deliver channels or apps to households, authenticate subscribers, provide billing, and make the content available across devices.
• Advertisers pay for access to viewer attention.
• Viewers and subscribers supply attention, subscription payments, data, and continued demand for the sport.

The boundaries are not fixed. A streaming company can be both the media partner and the distributor. A league can operate its own production and direct subscription service. A traditional network can place the same game on broadcast television and a streaming app. The economic functions remain even when one company performs several of them.

The Rights Market And The Platform Market Are Not The Same

Two ideas are often compressed into the phrase “two-sided sports-media market.” They should be separated.

The rights market is upstream. A league or team supplies permission to show games; networks and platforms demand packages of those rights. The price and terms depend on scarcity, exclusivity, expected audiences, competing bidders, production obligations, and the other uses a bidder can make of the content.

The platform market is downstream. A broadcaster or streamer connects viewers with advertisers, and sometimes connects content suppliers with subscribers inside a larger bundle. Participation on one side can affect value on the other. More viewers make the platform more attractive to advertisers. Advertising can help subsidize viewer access, but too many interruptions may reduce the value of the viewing experience.

The distinction matters because a platform can lose money on one relationship and still benefit overall. A streaming company might value a game for new subscriptions, lower customer churn, advertising, device use, retail memberships, or promotion of other programs. A broadcast network might value a marquee event not only for commercials during the event but also for promoting its fall schedule and strengthening its position with affiliates. The direct revenue from one telecast is therefore only part of a bidder’s willingness to pay.

Economists call these effects cross-side network effects. The term does not mean that adding any viewer is always equally valuable. An advertiser may care greatly about a particular demographic or market, while a subscription-only service may care more about converting a viewer into a durable paying customer. The platform chooses prices and access rules with both sides in mind.^[6]

The Cable Bundle

For decades, cable and satellite television placed many channels into a single subscription package. A household paid one bill. The distributor paid channels for carriage, often on a per-subscriber basis, and networks also sold advertising.

The cable bundle was especially powerful for sports because rights and production costs are largely fixed once an agreement is signed. Showing a game to one more connected household adds little cost relative to acquiring the rights and producing the telecast. A broad bundle could therefore spread those fixed costs across tens of millions of households.

This did not mean that every nonfan wrote a check labeled “sports subsidy.” The payment was embedded in a package. The distributor negotiated a wholesale carriage rate with each network, assembled channels, and charged the household a retail price. A sports network with valuable content could demand a higher carriage payment because losing the channel might cause some customers to switch distributors or cancel service.

The bundle created several advantages:

• A broad payment base. Revenue depended on the number of households receiving the channel, not only on the number watching a particular game.
• Predictability. Contracted carriage payments could be steadier than game-by-game advertising revenue.
• Low search and transaction costs. One subscription delivered many sports and entertainment products.
• Cross-promotion. A network could use one event to advertise another.
• Insurance against uneven preferences. Different households valued different channels, while the package pooled those preferences.

The last point connects to Chapter 4’s pricing discussion. Households differ greatly in the value they place on any one channel. Their values for an entire package may be less uneven because a household that cares little about sports may care more about news, movies, or children’s programming. Bundling can use that heterogeneity to create a product with more predictable total willingness to pay. Research on cable bundling treats this as a form of price discrimination, although the strength of the mechanism differs across channel types.^[7]

The same structure produced a political and commercial weakness. Consumers who watched little sports could see the bundle as expensive and inflexible. As broadband improved and streaming services offered alternatives, some households dropped traditional multichannel subscriptions. This is cord-cutting. Others entered adulthood without subscribing in the first place—sometimes called cord-nevers.

The important economic change was not simply that a cable customer became a streaming customer. The old bundle had made a very large group contribute to the fixed costs of sports content. Direct subscriptions ask a smaller, more selected group of fans to pay more visibly for that content. The audience may be more enthusiastic, but the payment base may be narrower and less predictable.

ESPN: From Bundle Anchor To Direct Distribution

ESPN provides an unusually useful case because the same company has participated in the cable bundle, advertising, league-rights markets, and direct streaming. It also reports enough information to show why cord-cutting does not translate mechanically into an equal decline in revenue.

Disney’s annual reports estimate that the domestic linear ESPN channel reached 92 million subscribers in 2015 and 61 million in 2025—a decline of 31 million, or about 33.7 percent. The series is not perfectly uniform. Disney changed how it treated some virtual multichannel distributors, and COVID-19 disrupted parts of the measurement process in 2020 and 2021. Those caveats make individual annual changes less precise, but they do not erase the long decline in linear reach.^[8]

The tempting calculation is to multiply the lost subscribers by a rumored monthly fee and call the result lost profit. That is not reliable. Public reports do not provide a clean contract price for one ESPN channel across all distributors, and gross carriage revenue is not profit. Rates vary, rights costs change, and ESPN includes multiple products and revenue sources.

Disney’s fiscal 2025 report offers a better way to state the mechanism. It reported $10.837 billion in domestic ESPN affiliate and subscription revenue and said that a 7 percent increase attributable to higher effective rates was offset by a 7 percent decrease attributable to fewer subscribers. It separately reported $4.273 billion in domestic ESPN advertising revenue.^[9]

The lesson is not that subscriber losses do not matter. It is that quantity and price can move in opposite directions. A network may temporarily offset a smaller subscriber base with a higher effective rate per remaining subscriber. Chapter 4 made the same point about ticket revenue: a decrease in quantity does not by itself determine the change in total revenue. Eventually, however, raising rates becomes harder if distributors and consumers have attractive substitutes.

Direct-To-Consumer Does Not Mean Doing Everything Yourself

The direct-to-consumer model sounds simple: remove the network and let the league sell games straight to fans. It can be a sensible strategy. It is not the disappearance of intermediation.

Consider what must happen before a fan presses play. Cameras and microphones must be placed. Announcers, directors, technicians, editors, and statisticians must produce the telecast. A service must authenticate the customer, collect payment, deliver reliable video under heavy demand, protect accounts, sell or insert advertisements, answer customer questions, and make the app work on many devices. Someone must promote the game and help viewers find it. Someone must absorb the loss if subscriptions disappoint.

A league that goes direct can perform these functions internally, buy them from specialized vendors, or form partnerships. It can eliminate a particular rights contract while still purchasing much of the underlying work. The economic question is not whether there is a company called “the middleman.” It is who performs each function, at what cost, and who bears the associated risk.

Control, Data, And Risk

Direct distribution can give a league or team more control over pricing, presentation, customer data, and the relationship with fans. A rights holder may learn who watches, how often, on which device, and which offers retain a subscriber. It can design packages for local fans, out-of-market fans, or a global audience.

Those advantages come with exposure. Under a traditional rights agreement, a media partner may promise a fixed payment. If the audience disappoints, much of the direct revenue loss initially falls on the media partner. Under a league-run subscription model, the league captures more upside if demand is strong but also bears more downside if subscriptions, advertising, or retention are weak.

This is a familiar economic trade-off. A guaranteed contract reduces risk and sacrifices some control or upside. Direct operation preserves more control and residual profit but places more capital and uncertainty on the rights holder. The correct choice depends on comparative advantage, scale, the league’s tolerance for risk, and the quality of the offers available—not on a universal rule that direct distribution is modern and intermediaries are obsolete.

From The Bundle To Fragmentation—And Back Toward Bundles

Cord-cutting is often described as a move from an unwanted bundle to a la carte choice. At first, that description fit the consumer experience. A household could cancel a large channel package and subscribe to one or two streaming services.

As more companies reserved valuable programs for their own services, the market changed. A fan might need one service for an NFL Thursday game, another for a local baseball team, another for a national basketball package, and a traditional or virtual multichannel package for still other games. The fan received more choice at the level of each purchase but also faced more passwords, prices, renewal dates, blackout rules, and interfaces.

This is why unbundling can produce re-bundling. Consumers value lower search and transaction costs. Platforms value lower churn and a larger surface on which to recommend content. Rights holders value reach. These incentives create new combinations: channel packages delivered over the internet, services sold together at a discount, authenticated access included with another subscription, and interfaces that aggregate schedules even when payments remain separate.

Rights Packages Are Strategic Designs

A league rarely sells “television rights” as one undivided object. It creates packages. A package can be defined by day, time, season phase, platform, geography, language, exclusivity, or type of game. The NFL separates Sunday afternoon, Sunday night, Monday night, Thursday night, playoff, and other inventory. Other leagues divide regular-season games, playoffs, finals, marquee events, and local or out-of-market access.

Package design affects competition among bidders. If all games are placed into one exclusive package, only firms capable of paying for and distributing the entire product can compete. Dividing inventory can attract more bidders and reach audiences across more platforms. It can also increase fragmentation for fans and reduce the exclusivity value of any one package.

The current U.S. structures in Table 5.2 illustrate mixed distribution rather than a simple replacement of old television by streaming.

The table shows why the word exclusive needs an object. A game may be exclusive nationally but still appear on a local over-the-air station in the participating teams’ markets. A streaming service may have exclusive rights to a package while a different platform carries highlights. A network may hold one national window while local rights govern many other games. “Exclusive rights” does not mean that the partner controls every use of the sport.

Reach Versus Revenue

A league designing packages faces a recurring trade-off between reach and revenue. An exclusive partner may offer a large guaranteed payment because exclusivity makes its subscription more valuable. Wider nonexclusive or broadcast distribution may reach more casual fans, support advertising and sponsorship, and build demand for the league over time.

The trade-off is not always either-or. The NFL combines exclusive packages with broad broadcast windows. The NBA’s current agreement places national games across streaming services while substantially increasing the number scheduled for broadcast television. A league can use one package for broad exposure and another for direct subscription value.

To compare proposals, the league should ask:

1. How many existing and potential fans can access the games?
2. What guaranteed and contingent revenue does the proposal create?
3. How much promotional support will the partner provide?
4. How will access affect attendance, sponsorship, merchandise, and long-run fandom?
5. Which party bears production, technology, advertising, and demand risk?
6. Does exclusivity make the product more valuable or make the sport too difficult to find?

A package with the highest stated rights payment can be inferior once these effects are included. A package with the largest potential audience can also be inferior if it sacrifices too much revenue or provides poor promotion and production. The decision is a constrained optimization problem, not a contest to maximize one column.

National And Local Rights

National rights cover games or packages distributed across the country. Local rights cover games within a team’s home territory that are not reserved for a national partner. The balance differs by league.

The NFL relies heavily on centrally negotiated national packages. Its regular season has relatively few games, and national windows can feature games from around the league. Major League Baseball, the NBA, and the NHL play much longer regular seasons. Historically, many of those games were distributed through local or regional arrangements as well as national packages.

This distinction affects both reach and team finances. Centrally sold national rights can produce shared league revenue and reduce differences generated by local market size. Local rights can allow a team in a valuable media market to capture more of its own demand. Later chapters will examine how leagues share revenue and why teams jointly produce a competition. Here the key point is that the level at which rights are sold changes who bargains, who receives the money, and who bears risk.

The Regional-Sports-Network Model

A regional sports network, or RSN, historically acquired local rights to teams in a defined territory, distributed its channel through cable and satellite systems, and earned a combination of carriage fees and advertising revenue. The model resembled the national cable bundle on a regional scale. Many households paid for the channel through a package, while a smaller group of fans supplied much of the viewing demand.

Cord-cutting weakened the RSN payment base. A network with fewer distributors or subscribers could find it harder to support a previously promised rights payment. Teams then faced a difficult choice. Preserving a high rights guarantee could reduce reach if the channel was unavailable on important distributors. Reclaiming rights and offering broader over-the-air or direct access could expand the audience while exposing the team or league to more revenue uncertainty.

When A Team Owns Part Of The Network

Not every local-media arrangement is a simple sale from a team to an independent broadcaster. YES Network owns the Yankees’ regional media rights, and Yankee Global Enterprises—the parent company of the Yankees—is one of YES’s owners. In 2019, Yankee Global Enterprises and an investor group acquired the 80 percent of YES then owned by Disney in a transaction that valued the network at $3.47 billion.^[15]

This is an example of vertical integration. A team-affiliated company may receive a rights payment while also sharing in the network’s profits, losses, strategic control, and equity value. The arrangement can align decisions about telecasts, distribution, advertising, and the team brand. It also exposes the owners to risks that a guaranteed sale of rights would place on an independent network. Vertical integration does not make production and distribution costs disappear, and it does not mean that every dollar earned by the network is automatically treated as team revenue under league rules. Ownership structure and revenue-sharing accounting both matter.

What Is A Blackout?

In ordinary conversation, fans use blackout for several different restrictions. One game may be unavailable locally because another partner holds exclusive territorial rights. An out-of-market subscription may exclude games in a subscriber’s home territory because the local package is sold separately. A national game may be exclusive to one partner. These arrangements have different contractual purposes and consumer effects.

A good analysis identifies:

• the fan’s location
• the game and date
• the service being purchased
• whether the restriction is local, out-of-market, or national
• which partner holds the relevant right
• whether authentication through another subscription provides access

Saying that a league “ended blackouts” can therefore be too broad. A club service may remove the local restriction for its regular-season telecasts while national exclusivities remain. The product definition matters here just as it did in the ticket market.

An International Comparison: The Premier League

The English Premier League shows that distribution is shaped by institutions as well as technology. For the 2025–26 through 2028–29 seasons, the league’s UK live packages are held by Sky Sports and TNT Sports, with BBC Sport holding free-to-air highlights. The agreements make every match outside the Saturday 3 p.m. closed period available for live UK broadcast, but games played during that protected window are not shown live domestically.^[19]

In the United States, NBC’s agreement through 2028 covers all 380 matches each season across its platforms.^[20] The same competition therefore creates different access products in different territories.

The Saturday restriction is often defended as protecting attendance at matches throughout the English football system. That is a hypothesis about substitution between televised Premier League games and attendance at other matches, not a self-proving fact. The policy may also encourage fans to attend in person, listen to audio coverage, watch highlights later, or seek unauthorized streams. Its actual effects depend on fan preferences, enforcement, scheduling, and the availability of alternatives.

The broader lesson is that a rights package is not merely a technological answer to “Where can the game be streamed?” It reflects collective selling, territorial segmentation, regulation, scheduling, historical practice, and league objectives. Copying the U.S. model into the UK—or the UK model into the United States—would change more than the app.

Rights Auctions And The Winner’s Curse

Leagues can use competition among media firms to discover willingness to pay and capture more of the value created by their games. That competition also introduces uncertainty.

Suppose several platforms bid for the same exclusive package. They all face uncertainty about future audiences, advertising prices, subscription growth, churn, production costs, and the value of future technologies. If the package has a similar underlying revenue potential for every bidder, it has an important common-value component. Each bidder receives an imperfect estimate. The most optimistic estimate is more likely to produce the winning bid.

The winner’s curse does not mean the winner literally regrets every auction or that the highest bid is automatically foolish. It is a warning about selection. Conditional on winning, a bidder’s estimate is more likely to have been unusually optimistic. Experienced bidders can respond by reducing their bids, improving information, sharing risk, or writing contingent terms.^[21]

Sports rights are not pure common-value assets. They also have bidder-specific complementarities. The same Monday-night package might create different value for two companies because one owns a broadcast network, a sports channel, a direct service, and other programs it can promote, while another uses sports to support a retail membership or technology ecosystem. One platform may have better advertising relationships or lower customer-acquisition costs. Different bids can therefore be rational even when all bidders forecast the same game audience.

This gives us a disciplined way to analyze a familiar puzzle. Imagine that one company pays more for a package whose games attract fewer direct viewers than another package. The first response should not be “winner’s curse.” Ask whether the expensive package protects carriage revenue, attracts subscribers, reduces churn, fills an important night in the schedule, promotes other products, or denies a rival a strategic asset. Only after accounting for those complements should we conclude that the bidder overestimated the package.

How A Bidder Can Reduce The Risk

A careful bidder can:

• construct conservative audience and advertising scenarios
• separate direct telecast revenue from broader strategic benefits
• compare the rights with the next-best use of the money
• use several independent forecasts rather than rewarding the most optimistic one
• negotiate performance contingencies or revenue sharing where possible
• divide packages or sublicense rights to reduce exposure
• assign a specific value to promotion, retention, and data instead of using them as vague justifications

The last item is especially important. “Strategic value” can explain a rational premium, but it can also become a phrase that excuses any price. A serious analysis specifies the mechanism and asks how it could be measured.

Who Should Bear The Audience Risk?

The connected distribution decision can now be stated more clearly. A league has a valuable but uncertain stream of games. It can accept a guaranteed payment, share revenue with a partner, operate more directly, or combine the models.

Consider two simplified proposals:

• Proposal A: A media company offers a large fixed annual payment for exclusive distribution. It controls the customer relationship and bears most of the short-run audience risk.
• Proposal B: The league retains broad distribution and direct customer access. It expects more revenue if subscriptions are strong, but it must finance production and marketing and bears the loss if demand is weak.

Proposal A may be attractive to a risk-averse league or one without distribution expertise. Proposal B may be attractive to a league with a strong brand, reliable demand, useful customer data, and the ability to operate at scale. The decision can also affect long-run demand. A narrow exclusive package may maximize current rights revenue while making it harder for young or casual fans to encounter the sport.

This is why reach is an economic variable, not merely a public-relations slogan. Reach can raise advertising value, sponsorship exposure, merchandise demand, and future fandom. But reach is not free. Giving a game to the widest possible audience may sacrifice subscription revenue or the exclusive value that caused a partner to bid aggressively.

The relevant objective may also differ across organizations. A mature league with a large national audience may monetize scarcity differently from a growing league trying to create new fans. A team that expects to sell out regardless of local television access may view the attendance trade-off differently from a team trying to rebuild interest. There is no distribution rule that fits every property.

Shared National Revenue And Team Finances

Media-rights revenue ultimately appears in team finances, but accounting categories require care. The Green Bay Packers publish financial information because of their unusual public ownership structure. Their reports provide a useful view of shared national revenue and local revenue.

Shared national revenue includes more than media rights. It also includes league sponsorship, licensing, and other shared sources. Local revenue includes ticketing, local sponsorships, retail, and events. Labeling the national category “television revenue” would therefore exaggerate what the disclosure tells us.

From fiscal 2020 through fiscal 2026, Packers shared national revenue rose from about $296.0 million to $453.2 million. Local revenue rose from about $210.9 million to $299.8 million, but the path was interrupted sharply in fiscal 2021, which covered the largely fanless 2020 season. Local revenue fell to about $61.8 million, while shared national revenue increased to about $309.2 million.^[22]

The pandemic observation is unusually revealing. When fans could not attend normally, local game-day activity collapsed. The games were still played and nationally distributed, so the shared national category did not collapse with it. This does not prove that every dollar of national revenue came from broadcasting. It shows why a stable shared national stream can insulate a team from shocks concentrated in its stadium and local market.

The same structure affects league organization. If national revenue is shared relatively evenly, a club in a small local market can receive the same national distribution as a club in a much larger city. Local revenue can still differ substantially. Chapter 6 will examine why teams share some revenue, retain other revenue, and cooperate to produce a league while competing on the field.

Media Rights And Franchise Value

A buyer of a team is acquiring more than the current season’s ticket and media revenue. The buyer is acquiring a claim on expected future benefits of ownership. If a league signs a durable media agreement that raises expected future distributions, those expected cash flows can increase what a buyer is willing to pay for a franchise.

The intuition is the same as valuing any long-lived asset. Future cash flows must be discounted because a dollar received later is worth less than a dollar received now and because the forecast is uncertain. In simplified form,

where $V$ is the asset’s value, $E(CF_t)$ is expected cash flow in future period $t$, and $r$ reflects the time value of money and risk.

The formula is a bridge, not a full valuation model. A $1 increase in current revenue does not mechanically add $1—or any other fixed multiple—to franchise value. The effect depends on whether the revenue persists, what costs accompany it, how it is shared, what taxes and reinvestment are required, and how risky the future stream is. Buyers may also value control, status, strategic assets, or expected resale gains.

The correct short version is: durable expected media revenue can raise franchise value because it increases expected future benefits of ownership. Chapter 6 will take up the harder questions of profitability, owner objectives, capital appreciation, and why observed sale prices can exceed simple accounting measures.

The Connected Media Decision

The chapter began with a puzzle: why do live-sports rights remain valuable when entertainment attention and sports distribution are both fragmented? The answer is a connected chain.

1. More entertainment choices disperse ordinary audiences.
2. A live sports schedule can coordinate a large audience before the outcome is known.
3. That scarce simultaneous attention is valuable to advertisers, subscription platforms, and larger business ecosystems.
4. Leagues and teams create the contest and control rights, but production, distribution, promotion, billing, and risk bearing still must occur.
5. The cable bundle spread fixed rights costs across a very broad household base.
6. Cord-cutting shrinks that base and shifts the business toward higher rates, direct subscriptions, mixed distribution, and new bundles.
7. Package design trades off exclusivity, reach, current revenue, fan access, promotion, and long-run demand.
8. Competitive bidding can transfer value to leagues, but uncertain common value creates winner’s-curse risk.
9. National and local rights allocate revenue and risk differently across teams.
10. Expected future media distributions can be capitalized into franchise value.

The durable point is not that streaming wins and cable loses, or that leagues should always go direct. Technologies and company names will change. The underlying functions and trade-offs remain.

Big Picture

• Attention is scarce even when content is abundant.
• Media fragmentation disperses audiences; sports-distribution fragmentation disperses access to games.
• Live sports can create unusually valuable simultaneous reach, especially when a league repeatedly attracts large national audiences.
• A media platform’s relationship with viewers and advertisers is distinct from its upstream purchase of rights.
• Bundling spreads fixed costs across a broad customer base; a la carte access gives consumers more selection but may narrow the payment base.
• Direct distribution can increase control and customer information while shifting production, acquisition, churn, and demand risk toward the rights holder.
• Intermediaries may change, but production, distribution, promotion, billing, advertising sales, and risk bearing do not disappear.
• Rights packages are choices over reach, revenue, exclusivity, fan access, and risk—not merely dollar amounts.
• The winner’s curse is a danger when bidders share uncertain common value, but bidder-specific complements can rationally produce different bids.
• Shared national revenue can stabilize team finances and help connect media economics to league organization.
• Durable expected media cash flows can contribute to franchise value, but revenue and value do not move dollar for dollar.

Review Questions

1. Distinguish media fragmentation, audience fragmentation, and sports-distribution fragmentation.
2. Why does an increase in entertainment fragmentation potentially make a large NFL audience more valuable?
3. What features of live sports encourage viewers to watch simultaneously?
4. Why is a large average audience not the same as reach? Why do advertisers care about the distinction?
5. Identify the upstream rights transaction and the downstream sides of a sports-media platform.
6. How did the cable bundle spread the fixed costs of sports rights across households?
7. Why does a decline in channel subscribers not imply an equal percentage decline in revenue?
8. What new risks does a league bear when it moves toward direct distribution?
9. Why can unbundling eventually lead to re-bundling?
10. What does a network or streaming platform add if fans already know which team they want to watch?
11. Why can streaming exclusivity increase a platform’s willingness to pay while also increasing fans’ access costs?
12. How do national and local media rights differ?
13. Why can broader potential reach fail to produce more short-run revenue?
14. How can team ownership of part of an RSN change both the potential return and the risk from local media rights?
15. Explain the winner’s curse in a common-value auction.
16. Why might two rational platforms place different values on the same rights package?
17. How can expected media revenue affect franchise value without producing a fixed revenue multiple?

Problems And Applications

1. A streaming platform expects a sports package to produce $600 million in subscription contribution, $250 million in advertising contribution, and $150 million in measurable retention and promotional value. Production and marketing will cost $180 million. What is the maximum rights payment consistent with breaking even under these assumptions? Identify two important risks the arithmetic omits.
2. A sports channel loses 8 percent of its subscribers while its effective revenue per remaining subscriber rises 6 percent. Without using the numbers as a claim about any real company, approximate the direction of subscription revenue. Why would advertising and cost information still be needed to assess profit?
3. A league receives two proposals. Partner A guarantees $1.2 billion and places every game behind one exclusive subscription. Partner B guarantees $900 million, places half the games on broadcast television, shares direct-subscription revenue on the rest, and promises $100 million in promotion. List the additional information needed before deciding. Explain who bears more audience risk under each proposal.
4. Three bidders estimate that the common revenue value of a package is $800 million, $900 million, and $1.1 billion. Each has no special complementary use for the rights. Why should the $1.1 billion bidder worry about the winner’s curse? How would the analysis change if that bidder could also use the games to reduce cancellations in another profitable service?
5. A team moves from an RSN agreement to league-produced telecasts available through local streaming and several distributors. Construct a table showing what may happen to reach, guaranteed revenue, customer data, production responsibility, and demand risk. Which changes are theoretically ambiguous?
6. An article claims that a sports property is “more popular” because it generated more total viewing minutes than another property generated average viewers. Explain why the comparison is invalid and describe one defensible comparison.
7. Suppose a new national media agreement raises each team’s expected annual cash flow by $20 million for ten years. Explain why the effect on franchise value depends on the discount rate, risk, costs, and expectations after year ten. No calculation is required.

Suggested Assignment

Imagine that you advise a professional league whose current media agreement expires after next season. Write a 750–1,000 word recommendation comparing two realistic distribution strategies: a guaranteed exclusive agreement with an established media company and a mixed strategy combining broad distribution with a league-controlled direct service.

Your memo must:

• define the league’s objective
• identify the likely viewers, advertisers, distributors, and rights holders
• compare reach, revenue, exclusivity, fan access, promotion, customer data, and risk
• distinguish a forecast from a known fact
• explain one possible bidder-specific complement and one winner’s-curse danger
• state which three pieces of evidence would most improve the decision
• give a recommendation and describe the conditions under which you would reverse it

Source Notes