Finally, the NFL gets a new dance partner to stream another corner of its far-flung TV operations. After many months of wrangling, and the notable bow-out of the world’s most valuable consumer company, Alphabet will pony up $14 billion over the next seven years to show hungry football fans the games they couldn’t watch in their home markets with the “NFL Sunday Ticket” premium package.
That’s $3 billion more, for four fewer years, than Amazon is paying for Thursday Night Football in a deal that started this fall. It’s eight times more than Apple is paying for a very different and far less popular (in the United States) kind of football, Major League Soccer, for access to pretty much every corner of MLS game viewing over a decade.
Also read: NFL, Google Announce ‘NFL Sunday Ticket’ Is Coming to YouTube TV, YouTube Primetime Channels
This deal, well, it’s a lot for not that much of the NFL video empire. And perhaps it’s about as big as deals will get going forward in the increasingly bubble-y world of TV rights to live sports events. It’s worth asking if we’re finally reaching Peak Sports Rights, just as we appear to have hit the long-predicted Peak TV more generally.
That said, this appears likely to be a big deal for Alphabet’s virtual MVPD service, YouTube TV, and for Sunday Ticket, which has been under house arrest on the fading DirecTV for far too long.
YouTube TV has evolved massively on the way to a sector-leading 5 million subscribers. Having the NFL package to market alongside its other entertainment, sports and news offerings will create a useful halo of prestige and breadth of options that should appeal to many potential new customers.
And given that part of the cost heretofore of subscribing to Sunday Ticket required festooning your domicile with a satellite dish, easy access to an online streaming package should be a big improvement. For a significant subset of NFL fans, it likely will spur signups and maybe even ad deals for YouTube TV itself. That’s certainly part of Alphabet’s value calculus.
Notably, Sunday Ticket also will be available as part of YouTube’s Primetime Channels, expanding access that could further drive signups. You don’t have to subscribe to YouTube TV to get a full dose of NFL games. For a set of folks who don’t care about traditional cable offerings or, more likely, get them somewhere else, this is good.
Price could be an issue for the relocated service, though. Under DirecTV, the base service cost nearly $300, with access to Red Zone and fantasy sports programming costing another $100.
One survey of more than 2,500 regular NFL watchers suggested more than 40% of those who had never subscribed to DirecTV’s version would be up for a streamed Sunday Ticket. That’s promising.
Also read: Move To YouTube Could Boost Number of NFL Sunday Ticket Subscribers
But price will matter when it comes to actually signing up, especially in a weakening economy. Barely a quarter of survey respondents said they would sign up at the $300 price. Cut it by a third to half, and the likelihood of signing up nearly doubles.
Certainly, plenty of other signs suggest people are embracing streaming sports with gusto. Comcast has been crowing about the stellar ratings and ad results on Peacock and Telemundo for its Spanish-language streams of soccer’s World Cup.
Even the chronically uninteresting ESPN Plus now claims 24.3 million subscribers. That’s up a ringing 42% in a year, though at least partly that’s because of ESPN Plus’s presence in the Disney Plus/Hulu bundle, which basically throws in the sports service for free.
Sinclair’s struggling skein of 19 regional sports networks, Bally Sports, just did its own streaming deal, with YouTube TV competitor FuboTV. As Next TV’s managing editor pointed out, the deal “does little to clarify” the parlous perch upon which Bally sits amid cable TV’s cord-cutting limbo. But until bankruptcy overtakes Bally Sports, Fubo has another notable programming source for its marketing as the sports fan’s vMVPD.
Not to be lost in the Alphabet-NFL deal is this: it also marks the limits of Apple’s free-spending habits for Apple TV Plus. Apple launched Friday Night Baseball last April with MLB. In February, it starts that very interesting, 360-degree rights deal with MLS. Neither costs anything like the Sunday Ticket deal, but both provide Apple with many of the same benefits on a much smaller scale.
Apple did spend months dickering with the NFL about Sunday Ticket, and was considered the frontrunner to win the rights for much of that time.
Then, a few days before this week’s announcement, Apple executives decided they “don’t see the logic” behind spending Two Large (or more; reports ranged as high as $3.5 billion) on a small slice of the NFL pie. That’s a harsh assessment that might give others pause when they’re pondering further sports rights deals.
And it’s not like Apple doesn’t have the money to do a deal this dear.
The company’s market valuation, even in this market, tops $2.1 trillion. It generated $90 billion in revenues in its last quarter. And with Apple TV Plus, it has quickly built a reputation in Hollywood as the deepest pocket in town.
But now we know how deep that pocket really is.
Perhaps Apple executives (and Warner Bros. Discovery’s CEO David Zaslav, who has voiced similar reservations) aren’t completely sold on the long-term value of live sports, at least at this kind of price.
Why spend billions of dollars to rent someone else’s content that has virtually no market value two days after it’s created? Maybe they decide to splash out more money elsewhere for their streaming brand, or do sports deals at a more reasonable price, or better return on investment.
Zaslav has mused publicly in recent weeks about WBD’s deal with the NBA, which should be up for renewal discussions soon. Given WBD’s many other financial challenges, does it want to keep propping up TNT with another expensive NBA deal? Would the NBA have a future place on the reshaped and renamed Max streaming service? What’s the value proposition for other live sports on other services in the future, and what does that mean for broad general streaming services?
It’s too soon to say that Peak Sports Rights has arrived. Until we get another round of deals, like the soon-to-expire NBA and the Pac-12 Network deals, we won’t have the market comps to make any judgments. But for leagues that have counted on endlessly higher prices for their TV rights, the fact that even Apple may have spending limits has to send a chill. ▪️
