DirecTV Rethinks NFL Sunday Ticket Deal Amid Cord-Cutting

Mark87

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Since it gets talked about a lot...the latest

The National Football League’s Sunday Ticket package, which allows football fans to view almost any game, has long been a cornerstone of satellite broadcaster DirecTV, which holds exclusive rights to the offering.
But DirecTV-parent AT&T Inc. T 0.13% isn’t sure it wants to renew the deal.

The company’s chief operating officer, John Stankey, said he believes Sunday Ticket’s value to the company has peaked and that a renewal—especially if it comes with a higher price tag—will be hard to justify at a time when consumers are canceling pay-TV connections, including at DirecTV.

“There’s less profitability to support the decision” to offer Sunday Ticket, Mr. Stankey said in an interview earlier this week. “It becomes less critical to the business over time.”

Any change may take some time. The current deal runs through the 2022 regular season and DirecTV pays an average annual rights fee of $1.5 billion, people familiar with the matter said. Still, it isn’t unusual for sports rights negotiations to begin well before contracts expire.
DirecTV would be open to discuss sharing the package with other platforms. Typically, nonexclusive packages are far less costly. “We’d always look at it,” Mr. Stankey said. “It all gets down to what the price of something is.”

An NFL spokesman declined to comment. The league recently had an opportunity to exit from the DirecTV arrangement, but opted to maintain the current deal, a person familiar with the matter said.

The NFL carves up its rights across multiple TV networks and digital platforms. In addition to DirecTV, a number of TV networks including CBS, Fox, NBC and ESPN each have a portion of the league’s schedule. Amazon.com Inc. streams Thursday night games, while Verizon Communications Inc. streams all in-market games and national games on mobile devices.


There are two Sunday Ticket offerings, one for $300 per season and another with more bells and whistles that costs $400. There is also an online offering for people who can verify that they can’t receive satellite signals.

The cost of Sunday Ticket rights has risen dramatically. The current 8-year deal’s average annual fee is a roughly 50% increase over the previous pact, which expired in 2014. DirecTV loses more than $500 million annually on the football package, people with knowledge of the deal said.
Mr. Stankey thinks the audience doesn’t have much room to expand. “I don’t think we look at that and say it’s a growth product,” he said. “I don’t think we’re going to wake up a year from now and suddenly there’s going to be more people in the United States that want to watch an out-of-market team.”

DirecTV doesn’t disclose how many of its customers subscribe to Sunday Ticket, but people with familiar with the matter say there are around two million paying subscribers.

In a pay-TV industry where all distributors are struggling as consumers increasingly cut the cord in favor of streaming-video options, DirecTV has been going through particularly tough times. The satellite broadcaster has lost millions of subscribers over the past several years. In addition, programming costs continue to rise.

MoffettNathanson Research analyst Craig Moffett said while subscription fees for Sunday Ticket alone don’t cover the cost of the NFL contract, there are other factors in evaluating its value to DirecTV.

DirecTV still earns healthy profit margins from Sunday Ticket subscribers as a whole, and many people only choose the satellite broadcaster because of the Sunday Ticket package.

“Lose the ‘Ticket’ and those customers will walk,” Mr. Moffett said.
 

TW

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I can see their concerns. If they are losing customers, and they lose $500 mill on a $1.5 billion investment each year, it stands to reason that the numbers of customers who are actually there for Sunday Ticket might not be as high as they'd hoped it would be.

I do think Thursday night football, double headers on Sundays, Sunday night games, and Monday games, have a direct impact on the number of subscribers. It's kind of like it was down here in South Texas, in the past. Until last year, we'd get at least 9 or 10 Packer games live. In fact, about five years ago, we got 12. That's a lot, considering this is Houston and Dallas country.

Where I'm not big on the idea of going to sports bars to watch games, a lot of people are, and I was surprised at how many continue doing it for the Packer games down here. It's turned into an "outing" for them, and they really enjoy it.

I wonder where all this is heading. I would be more than happy to pay $100 to $150 for a singular team season pass to all Packer games, even if it meant losing all the rest like I have with Sunday ticket. There's only so much football that you have time to watch.
 

TW

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Adding to this, I'm looking at buying in to the NBA package which I can get through my Roku on my TVs, for the Bucks games. It's $120.00 a year, so affordable. I'd do that for the Packers too.
 

HowardK4

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Here's the thing; they cut the NFL package and they're going to lose a lot of customers. DirecTv is already higher than most other programming sources, and if they cut the Direct Ticket there's no reason to stay.
 

TW

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I'm guessing here, but I think DirecTV is looking to move their market into the non-satellite business, having it available over your existing internet, and using the Amazon/Roku unwired applications for around the house.

I believe satellite is going to be a thing of the past. I can sit outside, drinking a beer, and watch anything I want on my lap top, or even my cell phone and tablet. I don't need to be glued to a point with a TV. In fact, I have a 19" TV that I take outside and set on my table, and watch games and such now. I do that quite often, all winter, and have friends over to sit around and have a few beers.

This whole thing about TV is changing so rapidly that it's hard to keep up. By the time you buy something, figure it out, and really start enjoying it, they take a couple steps forward and you're behind the times.
 

Packinatl

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A couple of things
  • If it leaves won’t be until 2021 at the earliest
  • NFL wants a streaming partner but price tag is to high. People look at the total steam numbers which are in itself low but more difficult to overcome will be minutes watching which are anemic
  • There won’t be ala Carte
  • Disney is salivating to add more NFL, my guess ESPN+ becomes a logical streaming partner
  • Next deal if it’s Dish or DirecTV will be non exclusive
  • Amazon is in play but only stream
  • One partner cable / satellite one Stream
 

Cheesedog

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It's not going to go through any major changes yet... But with even faster cell service on the near horizon which will exponentially increase streaming abilities etc... it's not too far down the road.

Once Disney gets a hold of things changes will accelerate.
 

HowardK4

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I'm guessing here, but I think DirecTV is looking to move their market into the non-satellite business, having it available over your existing internet, and using the Amazon/Roku unwired applications for around the house.

I believe satellite is going to be a thing of the past. I can sit outside, drinking a beer, and watch anything I want on my lap top, or even my cell phone and tablet. I don't need to be glued to a point with a TV. In fact, I have a 19" TV that I take outside and set on my table, and watch games and such now. I do that quite often, all winter, and have friends over to sit around and have a few beers.

This whole thing about TV is changing so rapidly that it's hard to keep up. By the time you buy something, figure it out, and really start enjoying it, they take a couple steps forward and you're behind the times.
You already can stream DirecTv - I do it all the time when I'm traveling. I guess my point is that without the NFL package, DirecTv's market share will tumble - there's nothing unique and it's over priced.
 

realitybytes

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Adding to this, I'm looking at buying in to the NBA package which I can get through my Roku on my TVs, for the Bucks games. It's $120.00 a year, so affordable. I'd do that for the Packers too.
and how many nba games does that buy you?

if i could stream all 16 packers games for $120, i would buy that.
 

TW

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and how many nba games does that buy you?

if i could stream all 16 packers games for $120, i would buy that.
It doesn't specifically say, but I get the impression that would give you nearly all, or all, the Bucks games over the course of a season. The only games you wouldn't get with the service would be those scheduled for national broadcast over national services like ESPN, etc. The one rub is that you will be blacked out if it's considered an "in-market game." In my case, living in South Texas, I'd be blacked out for Houston and San Antonio home games, but I don't care about them.

Another nice issue is that you don't need to have a cable or satellite service. You can use Roku or Amazon's Fire Stick, or just a smart TV, to access your games via the internet.

And yes, I'd go to that figure anytime for the right to view all 16 Packer games every year, without having full blown Sunday Ticket. I understand the reasoning for why it's done like it is. It doesn't discriminate against smaller TV market teams in the revenue streams. I can only imagine how anemic some teams revenue stream would be if they each received money based on their own feeds, not share the entire market.
 
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