DIRECTV-NFL deal about to be extended

[MikeO]

http://www.bloomberg.com/news/2013-12-12/directv-said-near-renewal-of-deal-to-carry-nfl-sunday-ticket-.html

http://profootballtalk.nbcsports.com/2013/12/13/nfl-denies-it-has-reached-new-agreement-with-directv/

Looks about to be a done deal. The NFL will not be moving the "SUNDAY TICKET" to Apple, Google, XBOX, Cable, or some variation of "streaming" like it had threatened to.

[EDGECRUSHER]

I still find it shocking that the NFL would want it's biggest package on such a small provider like DirecTV. The company wouldn't even be around anymore without the NFL. Are they really the highest bidder?

[fyo]

I still find it shocking that the NFL would want it's biggest package on such a small provider like DirecTV. The company wouldn't even be around anymore without the NFL. Are they really the highest bidder?

The last contract valued the package at $1 billion a year. The cable companies at the time didn't want to pay anything close to that up front, but tried to get the NFL to accept some sort of revenue-sharing deal. The latter carries the greater risk, of course, and that would have to be properly accounted for when comparing the deals. Obviously, the NFL preferred the larger upfront payment over sharing risks (and rewards) with providers.

The last deal also meant that the NFL retained permission to sell (directly or through a third party, such as a cable operator) the Sunday Ticket package in areas where DirecTV wasn't available.

Would the cable companies be willing to accept such a deal? Maybe.

Would the streaming services? Probably not, since determining coverage would be difficult at best and could often be remedied (although at substantial cost) by the consumer.

Additionally, Red Zone Channel was split out and no longer a DirecTV exclusive.

The current deal ensures maximum coverage for the NFL. Basically, EVERYONE who wants Sunday Ticket is able to get it.

Those factors make it difficult to compare numbers. The highest bid might not be the overall best deal for the NFL.

Finally, it's worth noting that DirecTV actually loses money on Sunday Ticket. They pay a billion a year, but only get $600 million in gross revenue (2 million subscribers at $300 a pop). As you pointed out, DirecTV owes a large part of its existence to Sunday Ticket, so the value to them is more than just the direct revenue.

Would that also be the case with cable? Unlikely, since there's rarely any competition anyway.

How about streaming? Maybe...

[MikeO]

I still find it shocking that the NFL would want it's biggest package on such a small provider like DirecTV. The company wouldn't even be around anymore without the NFL. Are they really the highest bidder?

It will NEVER go to Cable. Never, ever, never!! Here is why, if it goes to Cable then CBS and FOX are pissed because they pay the most money to the NFL to get the Sunday packages for the AFC and NFC games. Why do those games have value, because it lets CBS and FOX promote their other network programming (sitcoms, dramas, reality shows...etc) and they know on a Sunday the vast majority of Americans have cable and if they want to watch NFL football they are FORCED to watch CBS or FOX!   It's a guaranteed viewership so why give that up? They are paying for that guaranteed viewership each week!  And not give that group (the vast majority of Americans with cable)  the option to buy that Sunday Ticket package and watch only CBS games or only Fox games on a given Sunday. They would lose advertising dollars and the devalue what they are paying for. The NFL doesn't want to devalue those two Sunday Packages either, they need "max dollars" from both of those packages. So by keeping it on little ole DIRECTV with its tiny distribution nationwide, they keep CBS and FOX happy they keep DirecTV happy, they get DIRECTV to overpay for the package, and the league is happy! The league needs to keep the "Sunday Ticket" on a small scale. If it gets so big where its available to everyone.....it becomes counter-productive to the league and their own business model.

[Landshark]

It will NEVER go to Cable. Never, ever, never!! Here is why, if it goes to Cable then CBS and FOX are pissed because they pay the most money to the NFL to get the Sunday packages for the AFC and NFC games. Why do those games have value, because it lets CBS and FOX promote their other network programming (sitcoms, dramas, reality shows...etc) and they know on a Sunday the vast majority of Americans have cable and if they want to watch NFL football they are FORCED to watch CBS or FOX!   It's a guaranteed viewership so why give that up? They are paying for that guaranteed viewership each week!  And not give that group (the vast majority of Americans with cable)  the option to buy that Sunday Ticket package and watch only CBS games or only Fox games on a given Sunday. They would lose advertising dollars and the devalue what they are paying for. The NFL doesn't want to devalue those two Sunday Packages either, they need "max dollars" from both of those packages. So by keeping it on little ole DIRECTV with its tiny distribution nationwide, they keep CBS and FOX happy they keep DirecTV happy, they get DIRECTV to overpay for the package, and the league is happy! The league needs to keep the "Sunday Ticket" on a small scale. If it gets so big where its available to everyone.....it becomes counter-productive to the league and their own business model.

You make some great points here business wise.  But don't you think that if CBS and FOX are paying the NFL so much money, wouldn't it be productive for the NFL to allow both stations to have a doubleheader each week as opposed to only opening day and the last week of the season?

[MyGodWearsAHoodie]

It will NEVER go to Cable. Never, ever, never!! Here is why, if it goes to Cable then CBS and FOX are pissed because they pay the most money to the NFL to get the Sunday packages for the AFC and NFC games. Why do those games have value, because it lets CBS and FOX promote their other network programming (sitcoms, dramas, reality shows...etc) and they know on a Sunday the vast majority of Americans have cable and if they want to watch NFL football they are FORCED to watch CBS or FOX!   It's a guaranteed viewership so why give that up? They are paying for that guaranteed viewership each week!  And not give that group (the vast majority of Americans with cable)  the option to buy that Sunday Ticket package and watch only CBS games or only Fox games on a given Sunday. They would lose advertising dollars and the devalue what they are paying for. The NFL doesn't want to devalue those two Sunday Packages either, they need "max dollars" from both of those packages. So by keeping it on little ole DIRECTV with its tiny distribution nationwide, they keep CBS and FOX happy they keep DirecTV happy, they get DIRECTV to overpay for the package, and the league is happy! The league needs to keep the "Sunday Ticket" on a small scale. If it gets so big where its available to everyone.....it becomes counter-productive to the league and their own business model.

Not so sure about this.  My understanding is that *most* of the ads you see when watching a Sunday Ticket game are the CBS/Fox ads not ones directly from DirectTV.   The network is still getting eyeballs for the ads.  Granted if DirectTV was more widely available there would be shifts in viewing.  A Giants fan in SD will be watching  Fox ads from the Giants game instead of CBS while watching a Chargers game, but that should even out when the Chargers fan in Detroit watches CBS instead of the Lions.   

Reason why Cable wont get this is DirectTV is willing to offer more cash than the cable companies and in order for it to go cable would require the cable companies to get together in an agreement and as they are also competitors of each other it would be a massive problem.  If anyone takes it from DirectTV it would be netflix type company, but they are unlikely to outbid DirectTV, because losing this would be the death of directtv and netflix doesn't need the package to stay in business.

[Sunstroke]

My understanding is that *most* of the ads you see when watching a Sunday Ticket game are the CBS/Fox ads not ones directly from DirectTV.  

People still watch ads during TV broadcasts? Are their remotes broken?

[MikeO]

Not so sure about this.  My understanding is that *most* of the ads you see when watching a Sunday Ticket game are the CBS/Fox ads not ones directly from DirectTV.   The network is still getting eyeballs for the ads.  Granted if DirectTV was more widely available there would be shifts in viewing.  A Giants fan in SD will be watching  Fox ads from the Giants game instead of CBS while watching a Chargers game, but that should even out when the Chargers fan in Detroit watches CBS instead of the Lions.   

Reason why Cable wont get this is DirectTV is willing to offer more cash than the cable companies and in order for it to go cable would require the cable companies to get together in an agreement and as they are also competitors of each other it would be a massive problem.  If anyone takes it from DirectTV it would be netflix type company, but they are unlikely to outbid DirectTV, because losing this would be the death of directtv and netflix doesn't need the package to stay in business.

I know they are adds from CBS and FOX,. but if someone who wants to watch football is given the option of every game, they may go weeks without watching a game on one of the 2 networks. Why would either network want that? There adds won't be watched. Therefore neither Fox or CBS want the Sunday Ticket on cable. They want the vast majority of Americans who have cable who want to watch football to be FORCED to watch the 1 (or 2) games a week on each network!If you make the Sunday Ticket available to everyone then someone in Omaha or Toledo could one week watch 2 CBS games, the next week watch 2 CBS games, the week after watch 2 CBS games...and the people at FOX are going WTF?! When now in the "current system" odds are that same person is watching 1 CBS game and 1 FOX game. Because he is FORCED TOO! He has no options!

The Cable Companies tomorrow could band together and blow any offer DirecTV makes out of the water. They could triple that offer easily and top any offer DirecTV makes. They don't because they know its a waste of time and that the NFL, CBS, and FOX don't want the package on cable and will never give it to them. They may "flirt" with the cable companies every few years to get more money out of DirecTV but Cable has learned they are just used for that sole purpose and have no real shot anymore. And the Cable Companies aren't in competition with each other as each are a monopoly in there little areas which they service. You live in Rochester, NY you have one cable option. You live in Toledo, OH you have one cable option. There is no competition going on. They can work together but on this issue there is no reason too as they have learned this package will never come to Cable.

[fyo]

The Cable Companies tomorrow could band together and blow any offer DirecTV makes out of the water.

So you're saying that the cable companies would join together in a cartel and collude to keep an outside competitor down?

Yeah, don't think that would be legal.

[MikeO]

So you're saying that the cable companies would join together in a cartel and collude to keep an outside competitor down?

Yeah, don't think that would be legal.

Not keeping an outside competitor down....just buying a television package. They wouldn't force DirecTV out of business, they would just own the rights to a package. Happens all the time

[Spider-Dan]

People still watch ads during TV broadcasts? Are their remotes broken?

I don't think most NFL viewers are going to channel surf during a game.

[Landshark]

I don't think most NFL viewers are going to channel surf during a game.

Doesn't mean they will watch the ads. Commercial breaks are times to go more food or drink or use the commode.