Sources: NFL at odds with AT&T over future of Sunday Ticket

LOS ANGELES, CA - JULY 17:  A general view of atmosphere at DIRECTV CELEBRATES 25th Season of NFL SUNDAY TICKET at Nomad Hotel Los Angeles on July 17, 2018 in Los Angeles, California.  (Photo by Stefanie Keenan/Getty Images for NFL SUNDAY TICKET on DIRECTV)
By Daniel Kaplan
Jul 11, 2019

The NFL is at standstill in talks with AT&T over the future of NFL Sunday Ticket on the company’s DirecTV satellite outlet, NFL ownership and other sources said. As a result, they said, the NFL expects to ride out the current deal to its conclusion at the end of the 2020-21 season.

That means consumers of the popular out-of-market package would not get a streaming, cable or other option, as has largely been speculated. The eight-year, $12 billion DirecTV deal, struck in 2014, contained an option that allowed either side to end the deal a year earlier. That option, however, expired in recent months without the sides agreeing on a way to repackage the games. The parties have agreed to keep talking under a “gentleman’s agreement.”

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“They’ve been given lots of interesting ideas,” the NFL ownership source with direct knowledge of the talks said of AT&T. “I think they don’t know. And they don’t have a strategy. And I think they realize they overpaid for DirecTV. I’m not talking about the NFL rights (AT&T bought DirecTV for $67.1 billion in 2015). And I think they’re sort of paralyzed by what the right thing to do is, I don’t think they know. So I can’t tell you. I mean, if that’s the way AT&T wants it, then we’ll just play it out. I think, you know, the league’s given them some opportunities to be thoughtful and creative… win-win (ideas), but I think they don’t have the strategy yet.

“The NFL is going to be in a good position. I mean, I don’t mean that to sound obnoxious. But I mean, they’re gonna pay us a lot of money, or there are others with different business models lined up to pay us different money for different versions of it. So right…I think the NFL will be fine. I think AT&T is paralyzed.”

A DirecTV spokeswoman replied to a list of questions, “We don’t comment on rumors, speculation or the terms of our contract with the NFL.” That has been the standard comment when the telecommunication giant has been asked about the deal.

The NFL makes no secret it wishes to split the rights between the satellite carrier and a different distributor, whether streaming or cable. There have been reports recently that companies like DAZN, ESPN+ and Comcast are lined up. But that likely means they are lined up to pay for a non-exclusive piece, not the whole package.

“So in order in order for someone to take it (whole), they have to spend probably upwards of $2 billion (per year),” said Rich Greenfield, a media analyst with BTIG. “It’s awesome that DAZN or ESPN+ want to spend $800 million, I’m just making up a number, that would be awesome. The problem is you need AT&T to still want to spend a billion dollars, right? And I’m just not sure it’s worth a billion dollars, if it’s on those lines.”

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DirecTV has carried Sunday Ticket for 25 years exclusively on satellite. Over the years it has done some limited streaming in certain markets though its own services. But DirecTV has been bleeding customers (350,000 in the most recent two quarters), so the concept of giving up exclusivity to Sunday Ticket, which has long been a customer magnet, may not look appealing.

For the NFL though, aligning with a vibrant company, say an Amazon, must look far more appetizing.

“It’s sort of like the NFL has attached themselves to what used to be a rocket ship and now looks like a you know, like the Titanic,” Greenfield said.

In Greenfield’s opinion, if it’s true the NFL can’t strike a deal with AT&T, the timing is just wrong. A streaming service has yet to step up and buy exclusive rights to a major package (ESPN+ has paid heavily for UFC rights, but the MMA league has its own service too).

Amazon for example has dipped its toe in the waters, with non-exclusive rights to Thursday Night Football. But even its agreement to buy equity in the YES Network is a small step in the near term, a source close to that investment said. In the earlier years, Amazon Prime will not be streaming many Yankees games, this source said.

For Greenfield, that all will change one day.

“Look, I think the natural home for Sunday Ticket is on a digital platform. There’s no doubt in my mind, if Sunday Ticket was on YouTube TV, like the only way you could get Sunday Ticket was on YouTube TV, that would be the ultimate place for sports fan. The product works amazingly well on every device — TVs, smartphones, etc. Like that product should live in a digital world.

“They (the streaming outlets) may not be ready to make that type of investment today, right. It’s a timing issue. Not like this is not the future. It’s more of it’s still a little early, it will take a bit more time.”

(Top photo: Stefanie Keenan / Getty Images for NFL SUNDAY TICKET on DIRECTV)

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