The NFL Ratings Are Really Weak This Season: Who's Hurting The Most?

Analyzing the impact of weak NFL ratings on media networks, Jefferies said Comcast Corporation CMCSA's NBC will hurt the most followed by CBS Corporation CBS, given the greatest exposure of these companies in absolute dollars.

The firm also sees impact for other networks such as Twenty-First Century Fox Inc FOXA and Walt Disney Co DIS.

EPS Risk Modest, Though Sentiment To Be Hit

However, the firm believes earnings per share risk to NFL advertising is modest, although it sees sentiment turning incrementally negative if PT games continue to post double-digit rating declines. Jefferies estimates that about 19 percent of the fourth-quarter network TV advertising is accounted for by NFL accounts.

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Rating Weakness

Noting that Week 3 of the NFL season is now in the rear-view mirror, analyst John Janedis pointed out that all three weekends (from Thursday through Monday) saw year-over-year declines, with Week 1 seeing 10 percent drop; Week 2, 12 percent; and Week 3, 11 percent.

Delving on the probable cause of the weakness, Jefferies surmises that it could be due to the NFL programming being available on more platforms, less interest from younger demos and a more negative view on the NFL per se.

The Numbers

The firm estimates that 225 of the 276 NFL programming hours fall in the fourth quarter. The corresponding dollars for the total network advertising, according to the firm, is 19 percent of the total network advertising in the quarter.

Weakness More Broad Based

Jefferies noted that ratings for MLB and the U.S. Open Tennis have also been mixed. However, the loud noise surrounding the weakness for NFL is due to the ratings associated with the games.

Breaking Ad-Minutes

The firm noted that a look at all five NFL packages last week showed 52 minutes of advertising per game — of which, eight minutes is for promotional advertising for the NFL and the network and the remaining monetizable through national and local ads, with auto ads occupying one-third of the ad spots.

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Networks Affected At Varying Degrees

Jefferies' estimates pitch ad revenues from the NFL at $2.6 billion throughout the season, which is about 12 percent of ad dollars for the second half. NBC gets $800 million in ad dollars from NFL compared to Comcast's $615 million. However, CBS has the greatest exposure in terms of earnings per share, with 1.9 percent of its 2016 earnings per share and 5.7 percent of its fourth quarter earnings per share.

Summary of Jefferies' Ratings

• CBS: Buy.
• Comcast: Buy.
• Disney: Hold.
• Fox: Buy.

At Time Of Writing ...

• CBS: up 1.26 percent at $54.83.
• Comcast: down 0.16 percent at $66.57.
• Disney: up 0.38 percent at $92.55.
• Fox: down 0.1 percent at $24.28.

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