DirecTV deal with AT&T includes NFL Sunday Ticket exit clause
One of the first calls DirecTV Chief Executive Mike White and AT&T Chief Randall Stephenson made after putting the finishing touches on their deal was to NFL Commissioner Roger Goodell -- and not to ask for a group discount on luxury suites.
DirecTV is the exclusive home to the NFL’s Sunday Ticket, a very successful TV package that lets subscribers of the satellite broadcaster access every NFL game on Sunday afternoon for as much as $250 a season. The current deal, which expires at the end of next season, costs DirecTV about $1 billion a season.
The NFL and DirecTV have been trying to hammer out a new contract for several months. On a call with investors discussing AT&T’s $48.5-billion purchase of DirecTV, White said he is very confident that a deal will get done before the end of the year.
Keeping Sunday Ticket is so important to DirecTV’s future it is a condition of the deal with AT&T.
“The parties also have agreed that in the unlikely event that the company’s agreement for the `NFL Sunday Ticket’ service is not renewed on substantially the terms discussed between the parties, AT&T may elect not to consummate the merger,” the companies said in a government filing.
The NFL certainly is looking for more money from DirecTV for Sunday Ticket. Some industry observers have anticipated that the annual price tag could rise 40% to $1.4 billion next season followed by annual increases of 4%.
Sunday Ticket has allowed DirecTV to differentiate itself from other pay-TV distributors. However, newer TV deals by the NFL and the creation of the channel RedZone, which shows live action from every game on Sunday have taken away some of Sunday Ticket’s cachet.
“RedZone is a pretty good substitute product for Sunday Ticket,” said Brian Bedol, chief executive of Bedrocket Media Ventures and a former sports television executive in an interview on the subject earlier this year.
The hangup with the NFL, according to one DirecTV insider, has been securing more digital rights. Now DirecTV will have to decide if it is worth seeing whether the NFL will extend Sunday Ticket exclusivity to U-Verse, the AT&T video service that is in about six million homes.
Either way, the power to potentially derail a deal is likely to have NFL negotiators salivating for their next meeting.
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