Disney, Apple and Amazon have all submitted bids to become the new broadcast rights owner of the National Football League’s out-of-market Sunday Ticket package. 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 continues to be in discussion with all three bidders as it decides which partner it will choose, said the people, who asked not to be named because the negotiations are private.
The NFL wants any buyer to pay more than $2 billion for the rights and a stake in NFL Media, which is being packaged with Sunday Ticket, three of the people said. The NFL’s mobile rights could be part of the package, as well, since its previous mobile agreement with Verizon has ended.
DirecTV paid $1.5 billion per year for Sunday Ticket for the existing rights, which end after the upcoming 2022-23 season. The NFL pushed for 100% increases for its primary game packages last year, but there’s little chance the league will get $3 billion for Sunday Ticket, which has historically lost money for DirecTV, sources said.
Many observers, including some of the bidders themselves, have expressed surprise a deal hasn’t gotten done by now. The delay has to do with the mix of assets and associated partnership conversations wrapped up in the deal talks, two of the people said. If the discussions centered around Sunday Ticket only, an agreement probably would have already been reached, one of the people said.
There’s no urgency on an announcement, as DirecTV already will offer Sunday Ticket for the coming season. Bidders would like to get a deal done sooner rather than later because they want enough time to alert consumers that the owner of Sunday Ticket rights will change.
Spokespeople for Amazon, Apple, Disney and the NFL declined to comment.
DirecTV’s role
DirecTV required all Sunday Ticket package owners to also become DirecTV customers. That condition will no longer apply for this new deal, opening up the package to many new subscribers who will no longer balk at spending hundreds of dollars on the package because they didn’t want DirecTV.
DirecTV isn’t bidding on the current rights package but is willing to cut a deal with the winning buyer, two of the people said. An agreement, if reached, could lessen the financial burden for the winning streaming platform.
DirecTV is interested in maintaining a relationship with bars and restaurants. Sunday Ticket is a staple in sports bars that use the game package to bring in fans of non-local games, most of whom have no other way to watch their favorite team. Sunday Ticket is also popular with sports gamblers who want to see multiple games at the same time.
DirecTV would also consider acting as a residential pass-through. Under such an agreement, it could transfer all revenue for Sunday Ticket to the rights owner but still offer it to customers. This would allow DirecTV to mitigate churn while reducing switching costs for consumers. It would also backstop any potential streaming latency or reliability issues that may come with broadcasting live football over broadband.
Still, it’s unclear whether the winning bidder would be interested in such a partnership. Building a commercial relationship may be enticing for Disney, Apple or Amazon, and the winner may want to be the direct contact for all Sunday Ticket subscribers.
AT&T spun out DirecTV last year. It is now a privately held independent company co-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 usually sign up for the package each year, making Sunday Ticket a money-loser for the satellite TV provider, which no longer is interested in bidding on the full rights, according to a person familiar with the matter.
A spokesperson for DirecTV declined to comment.
Various obstacles
While Amazon has already acquired exclusive Thursday Night Football rights and Disney’s ESPN owns Monday Night Football, Apple would represent a new global partner for the NFL – with the world’s largest corporate balance sheet. That’s appealing for the NFL because it potentially brings a new bidder to the table for future deal talks
Apple has showcased its ability to broadcast live sports this year by streaming Major League Baseball games, though some fans, especially 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 carrying Thursday Night Football this year.
Apple would like to own global rights for Sunday Ticket, two of the people said. The NFL hasn’t reached the phase in its discussions with Apple where it’s decided if it will give those to the company or sell them separately, one of the people said. DirecTV currently owns U.S. rights only.
It’s also unclear whether Apple or Amazon have interest in buying a minority stake in NFL Media, which includes cable networks NFL Network and RedZone, and digital site NFL.com. Both technology companies may have little interest in the legacy pay-TV business, which is hemorrhaging millions of subscribers each year. But if the league is tying Sunday Ticket to an NFL Media transaction, both companies could bite the bullet to get a deal done.
It’s also possible the league could ultimately decide to sell the stake in NFL Media separately, one of the people said.
A buyer will also have limited flexibility on pricing, according to people familiar with the matter.
When the NFL signed contracts with CBS and Fox, the deals included language that mandates Sunday Ticket have a premium price so as not to pull too many eyeballs away from the local market Sunday afternoon games acquired by the broadcast networks, three of the people said.
That means any owner of Sunday Ticket rights won’t be able to significantly lower the price on the out-of-market package, which typically costs about $300 per year. It also prevents an existing streaming service, such as ESPN+, to simply add in Sunday Ticket at little or no extra cost to boost subscribers.
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