CBS could hypothetically lose NFL rights during new negotiations

Last Friday, CNBC’s Alex Sherman reported that Paramount, the parent company of CBS, and the NFL are formally entering negotiations to restructure CBS’s current media rights deal. It’s the first step towards the NFL’s goal of negotiating new media rights deals with each of its five current broadcast partners prior to the league’s contractual opt-out options after the 2029 and 2030 seasons.

As has been well-documented, the league believes its current set of deals, which began in 2023, are undervalued compared to other contracts for live sports rights. This is perhaps best displayed by the fact that both NBC and the Amazon-owned streaming service Prime Video will pay more on average per year for their current NBA broadcast deals than for the NFL.

Per Sherman, the NFL and CBS are in active talks over a rights fee increase, with a “bid-ask spread midpoint around 50% or 60%.” In real dollars, a fee increase of 50% or greater would result in CBS paying over $1 billion more per year than it currently does for its Sunday afternoon package. In return for the increased rights fee, the NFL would reportedly drop the 2029 opt-out clause in CBS’s contract, allowing the agreement to run through its terminus in the 2033-34 season.

There’s an interesting wrinkle to these negotiations, however. Unlike the NFL’s four other primary broadcast partners — Fox, NBC, ESPN/ABC, and Prime Video — there’s a way the NFL could get out of its deal with CBS before its opt-out at the end of the decade.

Some will recall, when David Ellison’s Skydance purchased Paramount from family heir Shari Redstone last summer, the transaction triggered a change-of-ownership clause in the NFL’s media rights deal with CBS. Under the terms of the clause, the NFL has a two-year window from when the transaction was finalized to opt-out of its deal with Paramount, if it chose to do so.

At the time, NFL commissioner Roger Goodell told reporters he did not anticipate the league would utilize its option. “I don’t see that happening, but we have that option,” he said at the Sun Valley Conference last summer. However, that was before the NFL acknowledged it would, in fact, embark on a venture to renegotiate its broadcast deals early.

Nowadays, that clause could provide key leverage for the NFL during the course of its negotiations with Paramount. Whereas the league would have to wait until the end of the decade to exit deals with its other four partners, it could leave Paramount at any time before the summer of 2027. If negotiations were to go south, the NFL could simply take CBS’s inventory using the change-of-ownership provision and bring those rights back to market.

And that’s why it’s so crucial for the NFL to negotiate with Paramount first, before any other partner. As Puck’s John Ourand reported earlier this month, the league plans to negotiate each deal piecemeal with its partners, announcing new agreements as they are finalized, rather than all at once as is typical. If for any reason negotiations with Paramount go sideways, the NFL would like to have that CBS inventory at its disposal for other negotiations.

To be sure, it’s still quite unlikely that talks between the NFL and Paramount would deteriorate to the point that the league would want to get out of the deal entirely. After all, the NFL has equity in Skydance, meaning it now has a de minimis stake in Paramount.

There’s also plenty of other incentive for the NFL to want to remain on CBS. For one, the league wants to make sure Paramount and CBS are in a stable enough financial position to compete for NFL rights the next time they come up for bid (seemingly after the 2033-34 season). And second, the NFL is still a believer in the reach of free-to-air broadcast networks like CBS, which is especially handy when trying to convince the federal government to continue granting the league an antitrust exemption.

And let’s be clear, Paramount CEO David Ellison has given every indication the company intends to maintain its relationship with the NFL, even at an increased price. One doesn’t purchase Paramount, then bulldoze into acquiring Warner Bros. Discovery, just to create a multimedia giant that doesn’t have NFL rights. The league is critical, perhaps even existential, for much of Paramount’s distribution and advertising businesses.

But the NFL’s change-of-ownership clause gives it good reason to negotiate with Paramount first. However the Paramount talks end will shape the rest of the NFL’s media rights strategy.

Imagine if, for whatever reason, the NFL did decide to pull out of its Paramount deal. Perhaps the league would then play hardball with NBC, telling the Sunday Night Football broadcaster to instead take CBS’s old Sunday afternoon package, leaving the primetime package to sell to a streamer. Maybe it would slice and dice the CBS inventory into a completely new configuration. The possibilities would be endless.

What’s certain is that, out of all five full-time NFL broadcast partners, CBS is the one entering negotiations with the highest stakes. Everyone else can guarantee broadcasting NFL games through at least the 2029 season. CBS cannot. And if the NFL decides it’s in its best interest to claw back CBS’s inventory right now, the rest of the league’s negotiations would get very, very interesting.