NFL ratings plunge has TV networks slashing ad prices, scrambling to make advertisers happy

The TV ratings for the National Football League this year have been so bad that networks are reportedly slashing advertisement prices and giving away commercial time to keep advertisers happy.

"TV networks are feeling the strains of disappointing NFL ratings, as they are forced to restructure deals with advertisers to make up for the smaller audience, and their opportunity to make money off remaining games during the lucrative holiday season narrows," the Wall Street Journal reported over the weekend, calling the changes "unheard of."

"Some networks also have considered letting advertisers pay less for commercials during NFL games and other programming than they originally pledged," the report added.

The Journal also noted that a large amount of the commercial time still available for this season is being given away to advertisers to make up for the league's viewership underperformance so far this year. These types of arrangements, called "make-good commercials," are made when a network under-delivers on the audience it promised in the original agreement.

Apparently, networks have made so many of these arrangements that there is "little ad time" left to be sold as the league enters its final quarter of the season.

NFL games are normally the most lucrative TV events for networks because they gather the largest number of live audiences, something advertisers crave. So when viewership drops, it can leave networks scrambling.

According to Nielsen data, through the first 13 weeks of the season, TV and digital ratings were down 7% across the board from last year, with viewership in the 18-49 and 25-54 age demographics hit the hardest. Things were especially bad in Week 13, as viewership dropped 29% in comparison to the same time last year, and on Thanksgiving — normally a good time for the NFL — when viewership plummeted 50%.

Deadline listed longer-than-usual presidential election coverage, postponements caused by the coronavirus pandemic, and "backlash from some fans over the league's social justice efforts, including its embrace of Black Lives Matter," as contributing factors to the viewer erosion.

"Even as surefire as the NFL has been — and the last couple years, NFL ratings stood up much better than network prime-time ratings — we are now in a situation where the NFL is declining," Gibbs Haljun, the investment lead at ad-buying firm, Mindshare, told the Journal.

But one analyst noted that while things are bad, some context is needed.

"Even though they're down, the NFL's [ratings] are the envy of the industry more than ever," Dr. Jon Lewis of Sports Media Watch said. "You're talking about a year when the NBA Finals averaged fewer than 8 million viewers, the World Series averaged fewer than 10 million viewers — and a Wednesday afternoon NFL game gets 10.8 million? And I'm supposed to be thinking the NFL's having a bad year?"