NFL TV Ratings Slide Worries Wall Street

CBS, ESPN, Fox and NBC will generate about $2.5 billion in NFL advertising revenue this season, but a 10 percent shortfall could translate to a $200 million cut in earnings, an analyst estimates.

NFL's ratings woes continued in Week 2, and Wall Street is taking notice, given there are fewer excuses for falling viewership than there were a year ago when Hillary Clinton and Donald Trump were distracting TV-watching Americans.

While NFL games remain some of the most-watched content on television, ratings slid 12 percent in the NFL's opening weekend, with many blaming Hurricane Irma. But without dramatic weather, the second weekend was off 15 percent year-over-year. This comes after an 8 percent ratings slump last season.

Guggenheim Securities analyst Michael Morris said he had been optimistic heading into the new season because audiences would appreciate some changes, including fewer commercial breaks and allowing players to creatively celebrate touchdowns. Now, though, he says, "early results do not support this optimism."

Jefferies analyst John Janedis figures CBS, ESPN, Fox and NBC will generate about $2.5 billion in NFL advertising revenue this season, but a 10 percent shortfall could translate to a $200 million cut in earnings.

Since the NFL season opened Sept. 7, shares of NBC parent Comcast are off 9 percent, ESPN parent Disney has seen its stock drop 3 percent and shares of CBS are down 5 percent. Only shares of 21st Century Fox have risen in that time frame, up 2 percent.

"Continued declines in NFL ratings again this season will likely place further downward pressure on media stocks," said Morris. He added, in fact, that "the NFL is an indicator of overall primetime programming ratings performance."

Pundits, meanwhile, continue to opine on the reason for the fall, with some trying mightily to dismiss a J.D. Power survey in July that put most of the blame on players who protest the National Anthem, the most prominent of them being Colin Kaepernick, who does not currently play for an NFL team.

That survey indicated 30 percent of the viewers who watched less football in 2016 than they did the season prior said they did so because they were offended by players protesting the anthem.

Broadcasters know it's a storyline that has continued into the current season and the networks usually point their cameras at the players who kneel during the anthem.

The second-most cited reason for tuning in less was "game delays, including penalty flags" (24 percent), followed by a three-way tie at 18 percent between "off-field image problems with domestic violence," "excessive commercials and advertising" and "presidential election coverage."

The league and broadcasters have cut back on ads but domestic violence is front and center in 2017 again, this time courtesy of Dallas Cowboys superstar running back Ezekiel Elliott. The league alleges Elliott physically abused a former girlfriend and is trying to suspend him for six games while representatives for Elliott are duking it out with the NFL in courtrooms, generating headlines every step of the way.

Way down on the list of survey results is the bugaboo that has been distressing all Hollywood lately: "cord cutting, i.e. canceling my subscriptions to cable or satellite TV." That answer was cited 6 percent of the time on the J.D. Power survey.

Consumers without cable or satellite package can still view NFL games via streaming on online services like CBS All Access, Sling TV, Amazon Prime and the like, which, of course, siphons viewers away from traditional outlets.

"When the dust settles, it looks like the (virtual pay-TV providers) may have gained more traction than consensus expectations, even with modest marketing spend," Janedis said.

It's not all doom and gloom of course. Last year, 31 of the Top 100 programs on TV were NFL games, and Michael Nathanson of MoffettNathanson predicted last week that NBC's Sunday Night Football and ESPN's Monday Night Football would grow their audiences this year over last year based on better matchups.

Fox, meanwhile, says viewership for its Cowboys vs. Denver Broncos game Sunday, which was delayed due to lightning, was up 18 percent over a game it broadcast a week before. And 12.3 million viewers ages 18-49 watched the Detroit Lions beat the New York Giants on Monday, up from 11.4 million who watched Monday Night Football on ESPN a week prior.

Plus, NFL Network says its Thursday Night Football broadcast of the Houston Texans beating the Cincinnati Bengals drew 8.1 million viewers, up 32 percent over the average of four Thursday night games on the network last year. The exclusive presentation of that contest was also the most-streamed regular season game ever across NFL Mobile by Verizon and the NFL's digital properties.

Also working in favor of the NFL and its broadcast partners is an explosion in the popularity of fantasy sports. According to the Fantasy Sports Trade Association, 53.5 million people participate in the U.S., with 66 percent of them playing fantasy football — and they watch NFL games and visit websites like ESPN.com and CBSSports.com far more frequently than those who do not play fantasy.