- Share this article on Facebook
- Share this article on Twitter
- Share this article on Flipboard
- Share this article on Email
- Show additional share options
- Share this article on Linkedin
- Share this article on Pinit
- Share this article on Reddit
- Share this article on Tumblr
- Share this article on Whatsapp
- Share this article on Print
- Share this article on Comment
This story first appeared in the May 30 issue of The Hollywood Reporter magazine.
AT&T’S $48.5 billion acquisition ($67.1 billion including debt) of DirecTV, announced May 18, has its share of detractors, most of whom have little chance of derailing the deal. But another entity might: the NFL.
That’s because DirecTV is negotiating renewal of its broadcast rights to every out-of-market Sunday regular-season game, otherwise known as NFL Sunday Ticket. The product’s popularity is such that a DirecTV regulatory filing outlining the merger’s terms states: “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.”
STORY: AT&T Announces $48.5 Billion DirecTV Acquisition
The price of airing football games already has skyrocketed for DirecTV. In 1994, the satellite provider paid $25 million a year for NFL Sunday Ticket, according to BTIG analyst Richard Greenfield. The annual rate jumped to about $200 million four years later, followed by steady increases that reached $1 billion in 2011. The NFL’s strengthened bargaining power because of the pending merger was a point raised by analysts during a May 19 conference call with DirecTV CEO Mike White and AT&T CEO Randall Stephenson. “I am still highly confident that we are going to get our deal done,” said White, adding that the two chief executives have pitched the merger’s merits to NFL commissioner Roger Goodell. White also spoke cryptically of the deal unlocking “further opportunities for the NFL and for us,” which might mean the combined entity could offer live games online to AT&T’s 16.5 million wired broadband subscribers and 58 million wireless smartphone subscribers.
“Everyone should be rethinking the importance of these sports rights, not to mention how acquiring Sunday Ticket rights could derail the AT&T-DirecTV transaction,” Greenfield told clients after the conference call. He said Dish Network, among others, has incentive to snag those rights not only to “disrupt” the planned merger but also because Dish chairman Charlie Ergen “has been quite vocal about launching an over-the-top broadband service later this year that could be aided by Sunday Ticket rights.”
DirecTV has 20 million U.S. subscribers, and AT&T’s video service, U-verse, boasts about 6 million. Combined, the company would be the nation’s second-largest TV provider behind a presumably merged Comcast-Time Warner Cable, which would serve 30 million U.S. consumers. Deep-pocketed Comcast also could try to wrest NFL Sunday Ticket from DirecTV and, if successful, kill the planned merger of two large competitors.
Of course, where the NFL lands is irrelevant to consumer groups lobbying the FCC to squash both deals as anti- competitive. “Instead of innovating and investing in their networks, AT&T and Comcast are simply buying up the competition,” says Craig Aaron, president of media reform group Free Press. “For the amount of money and debt AT&T and Comcast are shelling out, they could deploy superfast gigabit-fiber broadband service to every single home in America.”
Adds Sen. Al Franken, D-Minn., in a statement: “We’re moving toward an industry with fewer competitors. This hurts innovation, and it’s bad for consumers.”
Sign up for THR news straight to your inbox every day
More from The Hollywood Reporter
the hollywood reporter
The Hollywood Reporter to Celebrate Inaugural Kids Power Issue With Family Day of Festivities in Los Angeles
The Last of Us
Bella Ramsey Says They’re Worried Pedro Pascal’s “Daddy” Narrative Has “Gone Too Far”
Taika Waititi, Eva Longoria and Niecy Nash-Betts Talk Leading the Diversity Charge at The Hollywood Reporter’s Raising Our Voices Luncheon