TV Answer Man, I read your prediction that the NFL will give the next Sunday Ticket deal to two companies, DIRECTV and ESPN. But why would they do that? Doesn’t that make it less valuable to DIRECTV if another company has it? Probably a lot of people will cancel DIRECTV if they don’t need it for the Ticket, right? And why would another company want to share it with DIRECTV? — John, Marina Del Rey, California.
John, you’re right. I have predicted that the next NFL Sunday Ticket contract will be awarded to two companies, DIRECTV and Disney’s ESPN+ streaming service, starting with the 2023 season. As you know, DIRECTV has offered the Ticket as an exclusive since the launch of the football package in 1994. However, DIRECTV’s current agreement expires after the 2022 season.
Why would the NFL give the Ticket to two companies after nearly three decades of it being a DIRECTV exclusive? Let me count the ways:
1. DIRECTV will no longer pay the premium price for an exclusive.
The satellite TV service has lost several million subscribers in the last six years thanks to the rise of streaming and, arguably to a lesser extent, company (AT&T) mismanagement. And there’s no end in sight to the customer defections. Consequently, DIRECTV’s value as a company has fallen appreciably which makes it highly unlikely it would be inclined to pay a premium price for an exclusive Ticket deal. DIRECTV paid $12 billion over eight years the last time it renewed the Ticket contract. But the price for an exclusive could be double this time. There’s no way that DIRECTV’s new ownership team, which consists of AT&T and the private equity firm, TPG, could justify paying that.
2. Streaming is on the rise and many fans prefer it to traditional TV.
Many fans, particularly younger fans, would rather watch TV via streaming rather than subscribe to a cable or satellite service which requires expensive equipment rental fees and two-year contracts. However, since the Ticket is now a DIRECTV exclusive, there is no viable streaming option for this growing audience. The NFL wants to correct this problem as soon as possible.
3. But streaming isn’t an option for rural Americans who don’t have the Internet.
This is where DIRECTV comes back in. Studies have estimated that 20-40 million Americans don’t have access to a decent high-speed Internet service, or cable TV. Their only option for quality television is satellite TV. By allowing DIRECTV to continue offering the Ticket, the NFL can still reach the rural market plus the bar/restaurant business which generates significant revenue as well.
4. The split Ticket can lower the price tag for both companies.
While DIRECTV could lose some customers if ESPN+ also carried the Ticket, I suspect the number of defections would be smaller than some might think. The rural subscribers wouldn’t cancel and many urban/suburban customers wouldn’t either for a variety of reasons including the two-year contract, customer loyalty and overall satisfaction with service.
But DIRECTV would gain by splitting the Ticket because the league would require a smaller fee for the non-exclusive rights. Likewise, Disney’s price tag would be lower if it shared the package with DIRECTV. You might say that Disney would prefer to have the Ticket as an exclusive to boost ESPN+ subscriber numbers. But since DIRECTV’s Ticket audience would consist of a large number of rural residents, the crossover with ESPN+ audience would be less than if Disney, say, shared the package with another streaming venture.
5. DIRECTV still needs the Ticket.
Some industry analysts were predicting last year that DIRECTV would have no interest in renewing the Ticket after the 2022 season. But although the service is losing subscribers, the new management team wants to preserve its value in anticipation of a possible sale to Dish, or another company. If it doesn’t secure at least a slice of the next Ticket, DIRECTV’s value will fall even faster which could make selling the company impossible.
John, hope that makes sense. Happy viewing, and stay safe!
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