Disney, Apple and Amazon hold on as the NFL ponders Sunday ticket deals

DK Metcalf of the Seattle Seahawks during a meet and greet with DIRECTV NFL SUNDAY TICKET subscribers at the DIRECTV NFL SUNDAY TICKET Lounge on Saturday, February 1, 2020 in Miami, FL.

Peter Barreras | AP

Disney, Apple and Amazon have all made bids to become the new owner of the broadcast rights to the out-of-print National Football League Sunday ticket pack. They’re just waiting to find out who wins.

The three companies submitted bids weeks ago, according to people familiar with the matter. The NFL is still in discussions with all three bidders to decide which partner it will choose, said the people, who asked not to be named because negotiations are private.

The NFL wants each buyer to pay more than $2 billion for the rights and an interest in NFL Media that will be packaged with Sunday Ticket, three of the people said. The NFL’s cellphone rights could also be part of the package, as its previous cellphone deal with Verizon has expired.

DirecTV paid $1.5 billion a year for Sunday Ticket for the existing rights ending after the upcoming 2022-23 season. The NFL pushed for a 100% raise for its primary game packages last year, but there’s little chance the league will get $3 billion for the Sunday ticket, which has historically lost money to DirecTV, sources said.

Many observers, including some of the bidders themselves, have expressed surprise that the deal has not yet materialized. The delay has to do with the mix of assets and related partnership talks wrapped up in the deal talks, two of the people said. If the discussions were just about the Sunday ticket, an agreement would probably have been reached by now, one of the people said.

There is no urgency for an announcement as DirecTV will already be offering Sunday tickets for the upcoming season. Bidders would like to close a deal sooner rather than later because they want enough time to alert consumers that the Sunday ticket rights holder will be changing.

Spokesmen for Amazon, Apple, Disney and the NFL declined to comment.

The role of DirecTV

DirecTV urged all Sunday ticket package holders to become DirecTV customers as well. This condition no longer applies to this new offer, opening the package up to many new subscribers who will no longer shy away from shelling out hundreds of dollars on the package because they didn’t want DirecTV.

DirecTV is not bidding on the current rights package but is willing to strike a deal with the successful buyer, two of the people said. Should an agreement be reached, the financial burden on the winning streaming platform could be eased.

DirecTV is interested in maintaining a relationship with bars and restaurants. Sunday Ticket is a staple at sports bars, using the games package to attract fans of non-local games, most of whom have no other option to watch their favorite team. Sunday Ticket is also popular among sports players who want to watch multiple games at the same time.

DirecTV would also consider acting as a home pass-through. Under such an arrangement, it could transfer all revenue for the Sunday ticket to the rights holder, but still offer it to customers. This would allow DirecTV to reduce churn while reducing switching costs for consumers. It would also prevent potential streaming latency or reliability issues that can arise when broadcasting live football over broadband.

However, it is unclear whether the successful bidder would be interested in such a partnership. Building a business relationship can be tempting for Disney, Apple or Amazon, and the winner may want to be the direct point of contact for all Sunday Ticket subscribers.

AT&T spun off DirecTV last year. It is now an independent, privately held company jointly owned by AT&T and private equity firm TPG. When AT&T acquired DirecTV in 2015, Sunday ticket rights were so important that the entire $49 billion deal was contingent on renewing a long-term contract with the NFL. But fewer than 2 million subscribers typically sign up for the package each year, making Sunday Ticket a money loser for the satellite TV provider, which is no longer interested in bidding for the full rights, according to one with the matter familiar person.

A DirecTV spokesman declined to comment.

Various obstacles

While Amazon has already acquired exclusive rights to Thursday Night Football and owns Disney’s ESPN Monday Night Football, Apple would represent a new global partner for the NFL — with the world’s largest corporate balance sheet. That’s attractive to the NFL because it potentially brings a new bidder to the table for future deal talks

Apple has demonstrated its ability to broadcast live sports this year by streaming Major League Baseball games, though some fans, particularly older ones, have complained about the exclusive streaming package. Apple also agreed to stream Major League Soccer games in a 10-year deal announcement earlier this month. Amazon will be the first exclusive streaming provider for NFL games when it begins broadcasting Thursday Night Football this year.

Apple would like to own the global rights to Sunday Ticket, two of the people said. The NFL has not yet reached the stage in its talks with Apple to decide whether it will give them to the company or sell them separately, one of the people said. DirecTV currently only owns the US rights.

It’s also unclear whether Apple or Amazon are interested in buying a minority stake in NFL Media, which owns cable networks NFL Network and RedZone and digital site NFL.com. Both tech companies may have little interest in the legacy pay-TV business that bleeds millions of subscribers each year. But if the league ties Sunday Ticket to an NFL Media transaction, both companies could bite the bullet to finalize a deal.

It’s also possible that the league will eventually decide to sell its stake in NFL Media separately, one of the people said.

A buyer will also have limited pricing flexibility, according to people familiar with the matter.

When the NFL signed deals with CBS and Fox, the deals included language mandating that Sunday Ticket be premium priced so as not to divert too many eyeballs from the local market’s Sunday afternoon games acquired by the broadcasters, three said of persons.

That means any Sunday ticket rights holder can’t significantly lower the price of the out-of-market package, which typically costs around $300 a year. It also prevents an existing streaming service like ESPN+ from simply adding a Sunday Ticket at little or no additional cost to increase subscribers.

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https://www.cnbc.com/2022/06/24/disney-apple-and-amazon-keep-waiting-as-nfl-considers-sunday-ticket-offers.html Disney, Apple and Amazon hold on as the NFL ponders Sunday ticket deals

Drew Weisholtz

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