The NFL has been eager for the last few years to finally get a new Sunday Ticket contract signed. The league has wanted a deal in place by now to replace the expiring one with DirecTV for the out-of-market games package.
The league several years ago even solicited informal bids but plowed ahead with incumbent DirecTV. And soon after Apple’s media strategy evolved with its Apple TV+ streaming service and sports offerings, the two powerful cultural entities became a seemingly logical combination.
Apple is still the front-runner to score Sunday Ticket, but market insiders describe a stalemate of sorts between the entertainment titans that have at the very least delayed the consummation of the expected partnership.
On Dec. 15, 2021, NFL commissioner Roger Goodell said of the negotiations: “For us, it’s really hearing their creative ideas, looking at the type of proposals they have, the types of partnerships, the strategies that they want to take and we want to take , and get the best (deal) ultimately for us. We are confident we will get there. My guess is we’re months away, not days away.”
DirecTV celebrated its 25th season of carrying NFL Sunday Ticket in 2018, but with its contract ending after this season, the package is expected to move to a new provider. (Stefanie Keenan/Getty Images)
Fast forward to seven months later, which counts as months away, and Goodell revised the timeline and told CNBC that a Sunday Ticket deal would occur in the fall, but it still hasn’t happened.
What’s going on? Isn’t the NFL the hottest media property on the planet, and aren’t streamers desperate for sports content to distinguish their offerings?
“I would have expected by now that this would have been done, you know, it would have been easier,” said an individual close to the NFL who requested anonymity because the talks between Apple and the NFL are confidential.
The individual said part of the problem is the contract: Apple expected that categories not specifically excluded would belong to them, while the NFL way of doing business is only what is mentioned in the contract is given as rights.
“Because you have to think about, not the way things are today, not just the way things are tomorrow,” the individual said. “But the technology that has never even been invented, delivery systems that have never even been invented yet, ways people want to consume that have never been invented yet.”
In other words, Apple wants rights to the unknown.
Another individual, this one familiar with Apple, said: “This negotiation has gotten silly. … Clearly, there’s a problem. I think it’s really clear Apple is learning things they didn’t know.
“What the conversation is, is Apple’s like, ‘OK, we can’t sell internationally. OK, that was important to us. And we can’t sell it exclusively against Fox and CBS. Well, okay. Well, that changes its value.’”
The notion of selling against Fox and CBS means Apple may have inquired about rights to in-market games that the traditional broadcasters own exclusively. Apple’s deal with MLS is for all games.
Amazon Prime and Google’s YouTube remain in the mix should the talks with Apple deteriorate, which is by no means a certainty. Amazon this week confirmed reports that it was cutting up to 10,000 jobs, affecting primarily its corporate staff. Whether that could cause Amazon to rethink its pursuit is unknown.
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Amazon’s exclusive broadcast of “Thursday Night Football” is widely viewed as a big success, with average viewership reported by Nielsen just a hair under 10 million viewers per game, an astonishing number for a stream. The NFL has leaned towards Apple in the Sunday Ticket talks, however, hoping to align with one of the world’s most influential companies.
DirecTV launched Sunday Ticket in 1994 and the package was an instant success as fans for the first time could watch their favorite teams even if they did not reside in the home market. But as the rights fees crept up, the satellite-TV distributor grew hesitant. It last renewed in 2014 at an average price of $1.5 billion annually, a cost that proved a loss leader: The number of Sunday Ticket subscriptions could not pay for it, but it did drive consumers to other DirectTV offerings.
Owned by AT&T now, DirecTV is largely seen as out of the picture after this season, although it might make an effort to sublicense rights for bars and restaurants, as it has done for Amazon’s Thursday package.
The NFL has made it clear that it intends to strip Sunday Ticket from its satellite base and offer it via streaming. That opened the field to parties like Apple and Amazon, but also ESPN+ and others. Cost cutting at ESPN parent Walt Disney, and perhaps now Amazon, could impede interest. And the negotiations arrive as the sheen has come off plowing money into streaming, with losses piling up into the billions of dollars at some companies.
Warner Bros. Discovery CEO David Zaslav told an earnings call this month that the company, owner of HBO Max, is reluctant to “chase subscribers” for the streaming service. That sentiment hangs in the background of the NFL talks.
The NFL reportedly wants a price as high as $3.5 billion a year for the rights, a number that is, to put it mildly, aspirational. Apple, for example, would have to sign up 8.75 million subscribers each paying $400 for Sunday Ticket (and that’s after they pay for the core Apple TV+ service). DirecTV is believed to have about 1 million paying subscribers to Sunday Ticket.
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Sources: NFL prefers Apple for Sunday Ticket; package could offer more choices
Of course, the NFL is unique content, routinely consuming most spots of the top 50 TV shows every year. And it has routinely outperformed expectations on media deals, gaining over $1 billion annually for “TNF” when the previous rights holder, paying a bit more than half that, did not bid.
But with so many games now aired outside the traditional Sunday afternoon windows — the games Sunday Ticket has rights for — and the popularity of NFL RedZone, the value to consumers of the out-of-market package has long been diminishing. Then there is the added element that the NFL has been on a parallel track seeking to sell a share of NFL Media, with the Sunday Ticket new rights holder viewed as a possible buyer.
Whether that process has complicated the Sunday Ticket sales process is unclear. The NFL targeted a December owners’ meeting in Dallas as the time when it might unveil a Sunday Ticket deal. With that meeting 25 days away, it is uncertain that this is possible.
The 2023 season is still 10 months away, so the league does have leeway. The NFL wanted the deal done earlier to give the new rights holder time to get the technology right and to market the new home of the product, while the league communicates the new options to fans.
“They really need to have this announced by the Super Bowl,” said the individual close to the NFL, pinning the timing to the middle of February 2023. “But if it doesn’t happen, you’re really starting to run the clock .”
(Top photo of Roger Goodell: David Becker / Getty Images)
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