TV Answer Man, I don’t understand why Apple would allow DIRECTV to keep selling the NFL Sunday Ticket if it gets the next contract. Wouldn’t that hurt their subscriptions if they didn’t have it as an exclusive deal? Does this make sense to you? — Tony, Las Vegas.
Tony, CNBC reported last month that Apple, Amazon and Disney (for ESPN+) have all made bids for the next NFL Sunday Ticket contract. (DIRECTV’s current exclusive deal with the NFL expires after the 2022 season.)
The article suggests a league decision is not imminent but says DIRECTV has not made a bid. That’s not surprising, but CNBC raised eyebrows by reporting that DIRECTV hopes to continue selling the Sunday Ticket in 2023 and beyond by cutting a licensing deal with the winning bidder.
Why would Apple, Amazon or Disney agree to this?
Two major reasons:
1. Offset the cost of acquiring the Ticket
CNBC and other news outlets have reported that the next Sunday Ticket contract could cost as much as $2.5 billion a year. (DIRECTV is now paying around $1.5 billion a year.) That’s a significant outlay even for companies like Apple, Disney and Amazon with deep pockets. CNBC says DIRECTV would likely forward its Ticket subscription revenue (minus expenses) to the new Ticket rights holder, which could put a serious dent in the acquisition cost. (DIRECTV would still benefit from the arrangement because the Ticket would help reduce its subscriber churn.)
2. Reach subscribers that a streaming company can’t reach.
DIRECTV sells the Sunday Ticket to bars and restaurants as well as its satellite audience. For various reasons, including equipment and Internet difficulties, it would likely be difficult for a streaming company to serve the bar/restaurant clientele as well as DIRECTV. By allowing the satcaster to maintain its commercial business, the streaming company would generate more revenue.
In addition, many DIRECTV subscribers live in rural areas where streaming is still unreliable. Having DIRECTV as a partner would ensure that the winning streaming company could still generate subscribers (and revenue) from this audience.
There’s no guarantee that DIRECTV will establish a partnership with the next Ticket rights holder. But it says here that it would make financial sense for both parties to do so.
Tony, hope that helps. Happy viewing and stay safe!
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