Sunday Ticket Deal: NFL Wins, You Lose
At least one major partner is banking on the National Football League's ability to move past its current scandals.
The league and DirecTV have struck an eight-year, $12 billion extension for the Sunday Ticket package. That averages out to $1.5 billion a year, up from $1 billion annually in the current contract, which was set to expire at the end of this season.
As Yahoo Sports' Frank Schwab put it, "Every company in America wishes it could get a 50 percent bump in pay from its partners" -- especially one as publicly embattled as the NFL. But despite the loud cries from fans, sponsors, and politicians for the NFL to undergo sweeping change amid its domestic violence and child abuse crises, neither the league nor Commissioner Roger Goodell's job are in any real jeopardy as long as the business of football keeps going strong.
An NBC/Marist poll showed that though the majority of fans disapprove of the NFL's handling of its domestic-violence problem, 86 percent said it wouldn't deter them from watching football, a fact that's reflected in the continued overall rise of television ratings. And the market remains confident in NFL inertia: CNN Money's Paul R. La Monica reported that DirecTV shares were up 2 percent pre-market today.
DirecTV execs can now breathe a sigh of relief. The fight over Sunday Ticket had been threatening the tentative merger between DirecTV and AT&T, a deal reportedly worth around $48.5 billion that hinged on NFL television rights.
At first glance, it seems a bit unclear what the NFL stands to gain from maintaining Sunday Ticket exclusivity with DirecTV. Only two million of DirecTV's 20 million customers subscribe to Sunday Ticket, while media research firm SNL Kagan estimates the subscription base of other cable and satellite companies to total around 80 million. NFL Network alone is available in around 70 million homes, thanks to its broad presence on various providers.
The lynchpin of the deal seems to be that all sides are betting on mobile. Last year, the NFL extended its exclusive mobile streaming deal with Verizon for $1 billion through 2017. Under the terms of that deal, Verizon customers have smartphone access to the NFL Mobile app, free to subscribers of the "More Anything" data plan and $5 a month to everyone else. NFL Mobile streams nationally televised Sunday night, Monday night and Thursday night games, as well as local Sunday games.
Verizon's deal with the NFL doesn't include tablet or computer streaming, however, leaving a huge space for AT&T and DirecTV to make their mark. With traditional cable subscriptions falling by the wayside, providers are scrambling to find new ways to sell packages to customers, mostly with paid streaming services. Sunday Ticket's exclusivity on DirecTV has long been an issue for those of us who live in apartment buildings that don't allow satellite dishes. The company has tried to address this with various streaming-only packages that make little financial sense to consumers. The full-access package that allows you to stream Sunday Ticket on computers, tablets, phones and gaming consoles will run you $330 -- basically the price of a full satellite subscription.
Furthermore, the availability of DirecTV's streaming service remains severely limited. According to DirecTV, you must live in a "select apartment building" that doesn't allow satellite, attend one of 10 universities, or live in New York City, Philadelphia or San Francisco. And major issues in connectivity and video quality persist.
That's where AT&T comes in. While the NFL is surely hoping AT&T's 11.3 million U-Verse subscribers will pad viewership of Sunday Ticket games, DirecTV may be hoping AT&T's vast network will help improve its streaming quality. And, of course, AT&T gets to supplant Verizon as the major mobile provider of professional football.
As always, the only ones who lose are the consumers. If you're one of the small minority of the population that has access to DirecTV, don't expect Sunday Ticket subscriptions to get any cheaper. After Comcast's bid to acquire Time Warner, an AT&T-DirecTV merger means even fewer choices for viewers who are already shackled to traditional cable and satellite subscriptions purely because of their monopoly on sports programming. And as SB Nation's Ryan van Bibber notes, the NFL-DirecTV extension simply creates even more leverage for the league over players for the next round of collective bargaining in 2020, giving the league enough financial leeway to ride out a potential lockout.
On the bright side, Goodell is now $1.5 billion closer to his promise of reaching $25 billion of revenue by 2027, scandal and shame be damned.
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