Viewership Is Overrated

Many of us read a lot about television viewership in the sports business press. It is a simple and tangible metric that provides useful context for sports media storylines. Our goal with this piece is to argue that viewership isn’t everything. We’d go as far as to say that regular season, average-minute viewership—the metric we keep reading about—without substantially more context provides limited information relevant to assessing the value of that content.

Here's why: viewership is not as simple as it seems, and media executives look at many additional factors when valuing media packages.

Less than a month ago Sports Media Watch reported on recent NBA ratings:

What do they mean, exactly, when they say that the Lakers-Knicks game “averaged 2.51 million viewers on ABC”? “Viewership” is how many viewers were estimated to have watched that broadcast in the average minute.^[1] Viewership does not measure cumulative audience—i.e., how many unique viewers tuned in at any one point during the broadcast. For example, if 2.51 million viewers watched the Lakers-Knicks game, that does not mean that the game only touched 2.51 million people. It likely captured impressions across a larger segment of the population.

Sports Media Watch sourced their viewership number from Nielsen’s audience measurement business. How do we know? Because every viewership number you have ever read about is measured by Nielsen. Nielsen’s customers are mainly media companies aiming to monitor and assess television content performance. Nielsen primarily uses two devices to do so:

In the old linear TV world, Nielsen was the single source of truth. For national programming, like the NBA game referenced above, Nielsen’s sample size is likely ~50,000 people. From this sample, a statistical model then estimates that, for the entire U.S. TV viewing population, 2.51 million people were likely watching ABC during the game in the average minute. That’s what viewership really means.

In short, this is just an estimate, based on a sample of TV viewers who participate in Nielsen research. Viewership is based on what is, in effect, an electronic poll. Like our presidential elections of late, there can be large errors in polls. There is an error bound around any polling estimate (“accuracy”), and there is the risk of bias due to improper sampling (“precision”).

You can guess where this is going: viewership figures from Nielsen have come under scrutiny from networks and advertisers in recent years. A general knowledge of statistics, polling, and changing viewing habits, especially the decline of linear TV, raises valid concerns for Nielsen viewership. First, if a user forgets to log their viewing to their Nielsen device (for traditional People Meters), they won’t be counted.^[2] If a user watches the program on their iPad or smart phone, they won’t be counted in any case. Until recently, if he or she were watching in a bar or restaurant, the user could not be counted.^[3] Nielsen’s panel is relatively old, very small, and self-selected; hence, it is likely unrepresentative, in addition to the fact that younger demos do not watch as much linear TV anyway.

Here's what all of this means for those of us tasked with valuing sports franchises and sports media properties:

But we've picked on Nielsen enough. There needs to be a universal standard, imperfect or not, and Nielsen is it. Viewership is what we’ve got, and it still must be a massively important input. But even if we decide to accept our fate and utilize the imperfect viewership data we have, there are problems. We get into those next.

Here’s a fun fact: in 2024, the NHL’s regular season games were split between two networks – ESPN and TNT. Both are major cable properties, though one (ESPN) is the clear leader in premium sports. Another important difference is that ESPN’s NHL games were amplified by four properties: ESPN, ESPN+, Hulu, and ABC. Any games broadcast on ABC likely got a major viewership bump, as is common for anything shown on the Big Four broadcast networks (i.e., ABC, CBS, NBC, FOX). The result is that 2023-24 regular season viewership (i.e., the number of nationwide viewers estimated to be watching in the average minute of the broadcast) was 846,000 viewers on ABC, 486,000 on ESPN, and only 360,000 on TNT.

When all NHL programming was on NBC Sports Network during its last deal, viewership was, on average, 470,000 per game, with a visible downward trend starting in the 2016-17 season. (Happens to coincide with the beginning of cable subscriber erosion.) This downward trend appears to be continuing with TNT games but has experienced a step-change improvement on ESPN and especially ABC (Figure 3).

As much as we’d love to say so, this is not evidence of a sudden surge in NHL fandom. Instead, what is happening here reflects the fact that viewership is a function of both the content and the network marketing it.

Media deals have a less well-reported component that impacts viewership: what is the network and what is the promotion commitment? The promotion commitment comes in two forms: is the network willing to give you time on their most watched, most available properties? And is the network willing to advertise your programming on that network using their most valuable advertising inventory?

In this sense, viewership is not a magic, objective number that attaches to a sports league and is singularly a function of their fandom and avidity. The network matters. You need to know:

Let’s return to our NHL example. The big four broadcasters continue to be a major driver of reach, especially among older demos who are most likely to be captured by Nielsen. These networks exist in every basic cable and virtual skinny bundle package of every major distributor at high penetration rates. They also have a reputation of airing content (incl. other sports) that are a known draw, so they will invariably attract “channel flippers”.

The question a media company asks when evaluating a sports property is: “What kind of viewership can we bring to this league / sport, and how much would that cost in terms of dollars and opportunity cost vis-á-vis other sports in our portfolio?” A media company needs to account for production and promotional costs when valuing a sports media property. Any shelf space taken up by (a) the most valuable windows on (b) the most valuable networks or that must be promoted using (c) the most valuable ad inventory on those networks must be factored in.

Here’s the ‘so what’. If you are seeing viewership figures quoted from a Big Four broadcast network for a sports league, you are likely seeing the highest achievable viewership figure for that kind of content. Similarly, while it is hard to know for sure, what you are seeing is driven by a mix of organic fandom and network promotion – the higher the latter, the less “pure” the viewership figure in question. And it is fair to assume, in our view, that the oldest, most venerable leagues need the least amount of promotion to generate organic viewership, while the more nascent leagues are heavily reliant on it. This makes it a critical evaluative question, especially for assessing emerging leagues.

Here’s a simple way to illustrate this: just look at all major sports media contract AAVs vs. regular season (or “typical broadcast”) viewership (Figure 4a). Once the total number of games is included, there is more clarity, but there remain large deviations from trend in either case (Figure 4b).

To summarize, what matters to networks is not viewership per se, but viewership that drives revenue. Organic viewership that is tied strictly to the programming itself and that is actually at risk in an exclusive rights deal – that matters far more.

Media contracts are multi-year deals – they are medium- or long-term bets offering an annuity payment in exchange for upside. Those kinds of deals require extreme conviction in the stability of the property in question over multiple years. But let’s ignore that for now – what is the value of a sports rights deal in a single year?

Our view is that the value of the deal is equivalent to advertiser value + subscriber value.

Let’s start with advertiser value. This is the revenue attributable to all advertising inventory in the package—simple enough. Advertising revenue is approximately equal to the number of ad spots multiplied by the average cost per spot. Viewership usually enters the picture here: the cost per spot is decomposed as CPM (cost-per-1000-impressions) multiplied by average viewership. Why wouldn’t advertisers assign the same CPM to any viewer? A viewer is a viewer, right? Obviously, that’s not true. There are countless factors, some of which take us into the realm of art over science, but we’ll list as many as we can:

If advertiser value is all-encompassing measure of advertiser demand, subscriber value is a similar measure of subscriber demand. (Advertising and subscriber fees are the two main revenue streams for any media company.) One way to think about subscriber value is that it represents the affiliate / retransmission / subscription revenues that would be lost without the package (if the network already owns it) or the amount that can be gained by owning it. It is, in effect, a subscription market share test—if it helps us grow market share, that’s worth something. It’s not easy to estimate, but media companies have data to get as precise as possible.

In a world where streaming video is growing in importance, subscriber value is now, in practice, about 50% of the value of a premium TV contract. In other words, advertiser value will only get you to about half of the estimated value of the deal for the media network. The other 50% is determined by the following question: “will a subscriber switch to my network because I am airing this league’s games?” If the answer is “yes,” that is a massive lever for media revenues to the network, and hence their ability to pay a rights fee.

There are some subtleties we glossed over that are worth emphasizing. Some sports are more amenable to advertising inventory than others. Some sports have a naturally higher carrying capacity for advertising than others. More games mean more inventory, but there’s an optimal number of games to preserve scarcity and avoid oversaturation as well, so more spots are not always better. And finally, let’s go back to the reality that media executives must sign a contract today that typically forces them to commit to marketing and televising games for many future years: at least 3, but often 5-10. That’s a huge decision. That means you need to somehow run our equation both today and for many years ahead and be confident that nothing will break in the meantime—i.e., no sudden viewership slump, no fad or trend that suddenly waned, etc. The only sports properties that offer the safety required to commit dollars for many years in the future are the most premium leagues. This is an important, “silent” input to the equation.

What does all of this mean?

Sports media talk is ripe with references to viewership, and we get why. But if you were locked in a windowless room after having lived under a rock for two decades, and were told to value the NBA national TV contracts that begin in 2025-26 using just viewership data from their prior media deals, you would have likely wildly underestimated the value of the NBA. The NBA drives advertiser and subscriber value—and viewership is just one input to determining that.

[1] “Rating” is viewership divided by applicable market size of total available households, quoted in percentage terms.

[2] Though to be clear, that the household viewed a piece of programming would be counted in any case. However, this is a still a loss in precision.

[3] This was recently amended, resulting in a meaningful positive impact to sports ratings in recent years. Nonetheless, there remains debate about accuracy and precision for these so-called out-of-home (OOH) viewers.