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CBS' Downfall: Fox's Money, NBC's Agreement

December 24, 1993|LARRY STEWART

First came the bombshell that the Fox network had wrested the NFL's premier package, the NFC, away from CBS.

Fox simply offered more money, $100 million a year more. Business is business.

Three days later came the news that NBC had retained the AFC package, even though CBS had submitted what appeared to be an 11th-hour offer that topped NBC's by $30 million a year.

This wasn't a case of too little, it was a case of too late.

"At no time before last Friday did CBS say they were interested in the AFC package," said Joe Browne, NFL vice president for communications. "After saying no to the AFC for weeks, they became interested after losing the NFC to Fox. By then, frankly, their offer was too late."

CBS tried a similar ploy last May when, five days after baseball had announced a new partnership with ABC and NBC, it made a counteroffer. Baseball also rejected that late offer by CBS.

CBS officials have complained about unfair treatment and lack of loyalty, and the NFL Players Assn., whose members' pay is derived largely from TV money, is unhappy that the NFL took NBC's lower offer and is threatening to hold up the deal. The contract still must be approved by the NFL at its March meeting.

The NFL believes it did the right thing by honoring a Dec. 16 agreement with NBC. For one thing, NBC would have grounds for a lawsuit had the NFL reneged on its agreement, although NBC officials have said they would not have sued. That's easy to say now.

But the question remains: Why did the NFL close out negotiations on the AFC package so early? By doing so, it left $120 million over four years on the table.

Although CBS believed it had the right to make an offer on the AFC, league sources said it was never the NFL's intent to allow CBS to match NBC's offer, or vice versa, and that the the TV committee delayed announcing NBC's successful bid only because it wanted to examine the negotiating process over the weekend.

However, other sources indicated that a segment of NFL owners wanted to consider the CBS offer.

"We're mystified," said Neal Pilson, president of CBS sports. "We don't understand how they can take a larger number from Fox (but) then stay frozen on an agreement with NBC when a higher number had been made by us."

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With Fox contributing $1.58 billion over four years, the NFL's new television contract, which goes into effect next season, will pay the league a total of $4.4 billion. That's a 20% increase over the previous $3.6-billion, four-year contract that expires at the end of this season.

The new contract will raise each team's television revenue from $32.5 million a season to $39.2 million.

So the players' union doesn't have too much to complain about, particularly because the added revenue will raise the salary cap that goes into effect next season.

"We feel the overall deal is a very sound one," said Val Pinchbeck, the NFL's vice president for broadcasting. "As unhappy as everyone in the league is for not having CBS in the mix, there are great positives to having Fox."

*

The picture began taking shape on Dec. 7, after Fox had made an impressive presentation to members of the NFL's television committee in Dallas.

The TV committee is chaired by Commissioner Paul Tagliabue and includes owners Tom Benson of New Orleans, Pat Bowlen of Denver, Roger Headrick of Minnesota, Leon Hess of the New York Jets and Jerry Jones of Dallas.

Fox, which was unsuccessful in bids for a piece of the NFL contract in both 1987 and '90, this time was loaded with ammunition and, more important, big bucks.

Fox offered $210 million a year for the AFC and $300 million for the NFC.

Because this is a negotiation and not a bidding process, the NFL went to NBC and CBS on Dec. 10 and told them of the offers.

NBC, according to sources, increased its AFC offer from $188 million to $217 million.

CBS stood pat on the NFC at $295 million, figuring that the NFL would accept a lower offer from the incumbent.

But Fox went for the bomb, countering with its $395-million offer.

"There is no question that if CBS had been $20 million lower than us, the NFL would have taken CBS," Fox Chairman Rupert Murdoch said.

"We had pretty clear indications that CBS was prepared to go into the 300s. We didn't know what that meant, though--310, 350. What? When you start thinking that way, you can get edged out."

Getting the NFL was a stroke of genius for 7-year-old Fox, giving it instant credibility and establishing it as a fourth major network.

*

Fox now must put production and announcing teams together.

All indications are that Fox will spare no expense. The network convinced the NFL TV committee with its presentation in Dallas that production quality will be high.

Fox has already named a president for it new sports division, David Hill, an Australian who is the president of Murdoch's soccer-oriented Sky Sports channel in England. He will soon move to Los Angeles.

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