The deal announced between the NFL and ESPN seems unprecedented. By taking a stake in Disney/ESPN, the NFL would enter a new era of media deals that goes beyond rights and licensing. In some ways, it is new ground, but in other ways, it’s a logical extension of where the league was headed with NFL Media (comprising the NFL Network, NFL Films, NFL Redzone, and other properties) to expand the business into large-scale production and distribution. 

Mike Florio has pointed out that there are some sticky questions to answer before the deal is finalized. But assuming the deal eventually goes through, it is likely to become a model for other leagues to aspire to. If so, there is a surprising business analogy that can be drawn to a historical business model: the Hollywood studio system of the 1930s. The parallel starts with domination by the “Big Five.” Instead of the NFL, NBA, MLB, NHL, and MLS, it was Metro-Goldwyn-Mayer (MGM), Paramount Pictures, Warner Bros., 20th Century Fox, and RKO Pictures. 

The studio system ruled the US entertainment industry by vertically integrating across all aspects of the film business, from actors to distribution. The NFL deal portends a vertical integration model that is remarkably similar:

Vertical integration allowed studios to decide which stars to promote, which franchises to feature most prominently, and exactly where and when their movies appeared. Their success established Hollywood as the undisputed film capital of the world and developed the first truly global movie stars. American-born Westerns and Musicals became well-known genres far beyond their birthplace.  For all practical purposes, professional sports teams should be viewed in the same light. Stars (Scarlett Johansson and Catilin Clark) and franchises (Dallas Cowboys and Marvel) work in the same way. The co-ownership with ESPN and its multiple platforms in and outside the United States allows the NFL to exert similar power to determine who, how,  and when we consume their product to an even greater degree. This could add to the NFL’s dominance in the US sports marketplace and provide leverage for its global expansion.

The caution is that the Hollywood studio system was a victim of its own success. By forcing theaters to accept unpopular films in order to get the popular ones, and other oligopolistic tactics, it raised antitrust concerns. A series of regulatory measures culminated in a forced divestiture in 1948. It’s not difficult to see similar accusations if ESPN is suspected of covering the NFL and rival sports brands in ways seen as advantageous to the NFL. For example, you can’t help but ask whether the NFL’s pending ownership position played a factor in ESPN’s recent decision to cancel Spike Lee’s documentary on Colin Kaepernick. Whether for the potential or for the pitfalls, 1930s Hollywood has some lessons for this new deal.