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Analyst: NFL Ratings Drop Not Cause for Panic Yet

The big drop in NFL ratings has networks and advertisers in a tizzy, but a leading Wall Street analyst says it might be too early in the season to panic about the impact deflated football might have on network finances.

Football is a huge deal on TV, generating its highest ratings and rich ad revenue. NFL games represent 49% of Fox’s ad revenue, 40% of CBS’s, and 27% of NBC and ESPN’s revenue, according to Michael Nathanson of MoffettNathanson Research

“Given the massive reliance on the NFL for advertising and affiliate/retrans fees, we think investors are right to be focused on recent ratings weakness,” Nathanson says in a report Monday. “However, we believe there are enough legitimate explanations to hold off panicking four weeks into the new season.”

Gross ratings points for football were down 10% for the first four weeks of the season, according to Nathanson. Sunday afternoon games are down 3%, CBS’s Thursday night games are down 10%, NBC’s Sunday Night Football is down 23% and ESPN’s Monday Night Football is down 16%.

But over a two-season stretch the rating are down just 3% overall.

Nathanson says he thinks that the ratings problems stem from tough comparisons to booming viewership last season and less competitive games this season. During this season’s primetime games, the average margin of victory is in the double-digit range, up almost double last year.

He adds that the storylines for the most popular team have been less compelling so far this season because of injury, suspension or retirement of star quarterbacks, including Tom Brady, who returned on Sunday, and Peyton Manning.

Nathanson calculates that each NFL game generates advertising revenue of about $41 million. That ranges from a high of $53 million per game for NBC’s Sunday Night Football to $28 million for Sunday afternoon games on CBS And Fox.

Playoff games generate $63 million in ad revenue, Nathanson estimates.