Disney’s multiplatform Super Bowl plan derails ABC affiliates

Disney knows that business, like soccer, is a contact sport. In some cases, feuds between management teams can create hits within a company. A dispute with the Federal Communications Commission may also lead to a court appearance.

And Disney, which owns ABC, could be hit by its own affiliates.

ABC station owners are frustrated by Disney’s recent decision to broadcast the Super Bowl on a variety of platforms, including Disney+, ESPN2, NFL Network and ESPNU. The game is already being broadcast on both ABC and ESPN. The station group’s CEO, who requested anonymity because the data is private, said that across various platforms, advertising revenue related to broadcast viewership could be down as much as 35% compared to last year.

Disney has the rights to broadcast this season’s Super Bowl. ABC hasn’t hosted a Super Bowl since 2006. Disney returned to the Super Bowl rotation in 2021 when it signed its latest media rights deal with the NFL.

The Super Bowl is a big moneymaker for ABC. Some of these are owned by Disney, but the majority are part of local station groups owned by companies such as Sinclair, Nexstar and Tegna.

Fox announced last year that its Super Bowl ads generated more than $800 million in total revenue across all platforms. Calculating the main broadcast network is easy. There are approximately 85 30 second spots during a standard game. At an average price of $8 million per pop, that’s $680 million.

Most advertising campaigns are national, but some brands only buy into mass markets. This allows smaller markets to sell ads locally.

Average primetime viewership is approximately 8 million viewers. So if the Super Bowl draws 15 times as many people, your advertising costs will increase accordingly. Super Bowl LX, held in February, had 125.6 million viewers.

About 3% of a typical local affiliate’s annual advertising revenue comes from the Super Bowl, which is broadcast during the game, according to people familiar with the matter. That number could be even higher for owned-and-operated large-market stations, which typically receive about $10 million in advertising revenue from the Super Bowl, according to people familiar with the matter.

Local affiliates pay broadcast network owners (ABC’s Disney, NBC’s Comcast, Fox’s Fox, CBS’ Skydance) so-called reverse retransmission fees for the right to air network programming.

There is a standard process for discussing retransmission fees. Disney pays billions of dollars for live sports and is seeking funding from affiliates to help pay for it. The affiliate then negotiates with the pay TV provider and charges a retransmission fee.

This is the reason why broadcasting companies are thriving. For decades, the Super Bowl was a television-only show. Access to the Big Game was a big part of that fee.

For years, media companies have made the Super Bowl available to both broadcast and streaming viewers. Yet this year, Disney threw a wrecking ball at its previously exclusive broadcasts.

Given that this game is an ESPN production and features ESPN’s main “Monday Night Football” announcing staff (Joe Buck and Troy Aikman), it’s natural to think the cable network would get significant viewership for this game.

Disney is also distributing this game on Disney+. Disney+ is a streaming service that hasn’t traditionally been about sports. Broadcasting the Super Bowl on streaming services is nothing new. NBCUniversal’s Peacock, Fox’s Tubi, and Skydance’s Paramount+ have streamed the game in the past. However, these services allow geofenced dynamic ad insertion (DAI), allowing local affiliates to sell commercials to streaming viewers. Disney+, which typically doesn’t broadcast live ABC sports programming, doesn’t have DAI.

Disney is also broadcasting a so-called “alternative cast” of the game on ESPN2 (with Eli and Peyton Manning doing the typical “Manning cast”), ESPNU (“Super Bowl LXI Field Pass with the Pat McAfee Show”), and NFL Network (“Super Bowl LXI Playbook with Next Generation Stats”).

Disney is also airing an alternative Star Wars-themed cast on Disney Channel and Disney XD. Alternate broadcasts of “Star Wars” will also be aired on Disney+.

A Disney spokesperson said the commercials that will run nationwide will be the same on all platforms. Alternate cast members in Star Wars will not display ads.

Disney hopes to synergize its platforms to maximize viewership and recoup advertising revenue.

“The Super Bowl is the most-watched television broadcast of the year, and with its wide distribution across ESPN, ABC and Disney+, we will give fans around the world more ways to enjoy the game than ever before,” said a statement provided by a Disney spokesperson. “Making high-profile live events available for streaming is an established practice in the industry. Fox and NBC recently offered the Super Bowl on Tubi and Peacock, as well as streaming the Oscars on Hulu and Dancing with the Stars on Disney+, for example. This approach is not unprecedented as we meet the modern consumer where they are.”

Even so, when you put everything together, broadcast viewer ratings will definitely decline. One Station Group CEO estimated that local ad revenue related to gaming could drop by 35%. The executive declined to be named because the analysis is private.

“When you fragment distribution, you destroy the value of each platform,” the CEO of Station Group, who requested anonymity for fear of retaliation, told me. “There’s nothing wrong with what Disney is doing, but the problem is that they don’t recognize that we’re losing money.”

This issue of declining ratings for Super Bowl broadcasts and resulting advertising revenue is of such concern that it is currently being discussed by relevant committees. The committee is an elected body of executives from across the television broadcasting industry that serves as a liaison between local stations and their parent networks (in this case, Disney/ABC).

Even if affiliates receive compensation, it is unclear exactly how the compensation will be paid.

The decline in traditional TV viewership is forcing Disney to expand its reach to new platforms and new audiences who don’t watch cable or broadcast TV.

The network’s executives want Disney to lean into a business that remains profitable, albeit in decline. Several of those executives told me privately that they believe Disney is doing itself and the broader linear TV ecosystem a disservice by not coming together with its affiliates to keep viewers on its broadcast platforms.

“Our ABC affiliates are important partners and we always carefully consider them when making these decisions,” a Disney spokesperson said. “We have successfully worked with the Board to navigate similar situations many times before, and this time is no exception.”

The chairman of the ABC Television Affiliates Association’s board of directors declined to comment.