Amazon likely favorite for multi-year NFL Sunday ticket deal: sources

Amazon is in talks to acquire the rights to the National Football League’s “Sunday Ticket” package and is seen as a favorite by others involved in the league talks, according to people familiar with the matter.

Amazon has a serious interest in the multi-year off-market gaming package, said the people, who have asked not to be named because the discussions are private. Amazon agreed in May to pay around $ 1 billion a year to become the exclusive supplier of Thursday Night Football games from next year. This deal made Amazon Prime Video the very first streaming service to have an exclusive NFL streaming package.

An Amazon spokesperson declined to comment on the discussions on “Sunday Ticket”.

The NFL is expected to ask $ 2-2.5 billion a year for the package and wants to wrap up talks before the season ends in February, two of the people said. “Sunday Ticket” has been owned by DirecTV for 27 years. Talks are progressing with interested parties, suggesting the league is getting closer to choosing a new supplier, the people said.

DirecTV, which AT&T formed as a new company last month, renewed “Sunday Ticket” in 2014 for eight years. The current contract ends after the 2022-23 season.

NFL Commissioner Roger Goodell told CNBC on Wednesday that the off-market Sunday gaming package “may be more attractive on a digital platform,” as streaming platforms continue to add subscribers at the expense of traditional pay television. Goodell also suggested to CNBC that the league was looking for a strategic partner to not only acquire the “Sunday Ticket” rights, but also invest in NFL Network, which streams NFL content year-round, and NFL RedZone, which shows live footage. Live action of the game when teams are close to scoring touchdowns. The NFL currently owns both NFL Network and NFL RedZone.

Amazon is competing for the rights to the Sunday game. ESPN Chairman Jimmy Pitaro told Bloomberg this week that “Sunday Ticket” is “an incredibly valuable commodity” and acknowledged that Disney has had exploratory conversations with the league. The news site Information reported that Apple has also expressed interest in the package. NBCUniversal’s Peacock is not expected to bid for the rights, according to a person familiar with the matter.

Several media officials involved in the talks told CNBC they see Amazon as the frontrunner to win the rights to the package. NBC News reported Amazon and ESPN’s early interest in the package in July.

DirecTV is still considering its options but may not have the track record to compete with Amazon or Apple, whose market valuations are near or above $ 2 trillion, two people said.

DirecTV has paid around $ 1.5 billion per year for “Sunday Ticket” over the past seven seasons and currently charges around $ 300 for the package as an add-on. The satellite television provider now also offers “Sunday Ticket” as part of its “Choice”, “Ultimate” and “Premier” pay television packages.

DirecTV has lost money on “Sunday Ticket” for many years. At its current price of $ 300, DirecTV would need 5 million subscribers to break even. DirecTV has averaged over 2 million Sunday Ticket subscribers for many years, according to a person familiar with the matter. Executives at DirecTV and its majority owner AT&T have argued that “Sunday Ticket” has become more and more diluted over the years as the NFL drops Sunday games and adds Thursday, Saturday and Monday night games. .

Yet DirecTV was prepared to use “Sunday Ticket” as a leading product if it turned its subscribers into year-round satellite TV customers. That way, the company could recoup some of its losses by collecting monthly pay-TV fees during the NFL season and its seven-month offseason.

The NFL may be able to significantly expand the “Sunday Ticket” audience by separating the product from DirecTV. The satellite TV provider allows customers to broadcast “Sunday Ticket” without becoming a DirecTV customer only if they live in areas where they do not have access to DirecTV. A streaming service would allow anyone to access “Sunday Ticket” without the added restriction of having to switch their pay TV provider to DirecTV. This could unlock the proceeds for millions of Americans who purchase a bundled cable TV service with broadband. DirecTV does not offer high speed Internet service.

Amazon also has an ancillary activity that it wishes to offer to “Sunday Ticket” subscribers: an Amazon Prime subscription. Amazon’s video strategy has long been about making people addicted to Prime. In its effort to be “The Everything Store,” Amazon may use live sports to link directly with fans who are also interested in purchasing sporting goods. Amazon has made deals with the New York Yankees of Major League Baseball and the Seattle Sounders of Major League Soccer over the past year as it tries to connect with audiences with Prime Video and sports. live.

Amazon is also hoping to expand Prime Video’s business with its pending $ 8.45 billion acquisition of MGM and its “Thursday Night Football” purchase to create a booming advertising business, which grew 87% year-over-year. second quarter to reach more than $ 7.9 billion. While Amazon still lags behind the digital advertising behemoths Facebook and Google in U.S. market share, the company recouped 10.3% of U.S. dollars from digital advertising last year, up from 7.8% in 2019, according to a report by research firm eMarketer.

Amazon Web Services has also been the technology provider to the NFL in the development of Next Gen Stats, which has analyzed and stored data on every NFL player and game since 2017. The NFL has a history of working with partners in broadcast with which it has established relationships. The league renewed its broadcast agreements with all of its existing media partners earlier this year. While Apple’s purchasing power rivals that of Amazon, Apple doesn’t share the same relationship history with the NFL.

Buying live sports rights is also helping Amazon grow its business as regulators crack down on big tech acquisitions. Amazon has already been able to expand into new businesses by acquiring the companies Whole Foods, Ring and Zappos. That avenue could be temporarily restricted as new FTC President Lina Khan, who has criticized Amazon’s growing market power and influence on the economy, examines Amazon’s deals. How regulators view Amazon’s pending MGM deal will be a window into Khan’s thinking.

– CNBC’s Jabari Young helped with this story.

Disclosure: NBCUniversal is the parent company of CNBC.

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