Technology

Amazon likely front-runner for multi-year NFL Sunday Ticket deal — sources

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Dallas Cowboys wide receiver Brandon Smith during the game between the Dallas Cowboys and the Jacksonville Jaguars

Matthew Pearce | Icon Sportswire | Getty Images

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

Amazon has a serious interest in the multi-year package of out-of-market games, said the people, who asked not to be named because the discussions are private. Amazon in May agreed to pay about $1 billion per year to become the exclusive provider of Thursday Night Football games beginning next year. That deal made Amazon Prime Video the first-ever streaming service to own an exclusive NFL broadcast package.

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

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

DirecTV renewed ‘Sunday Ticket’ in 2014 for eight years. The current contract ends after the 2022-23 season.

NFL commissioner Roger Goodell told CNBC Wednesday the out-of-market Sunday game package “maybe will 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 the league is looking for one strategic partner to acquire not only “Sunday Ticket” rights but to also invest in NFL Network, which airs NFL content all year, and NFL RedZone, which shows live footage of game action when teams are close to scoring touchdowns. The NFL currently owns both NFL Network and NFL RedZone.

Amazon has competition for the Sunday game rights. ESPN chairman Jimmy Pitaro told Bloomberg this week “Sunday Ticket” is “an incredibly valuable product” and acknowledged Disney has had exploratory conversations with the league. The Information reported 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 executives involved in the discussions told CNBC they viewed Amazon as the favorite to win the rights to the package. NBC News reported Amazon and ESPN’s early interest in the package in July.

DirecTV’s tenure

DirecTV, which AT&T spun out as a new company last month, is still considering its options but may not have the balance sheet to compete with Amazon or Apple, whose market valuations are close to or above $2 trillion, two of the people said.

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

DirecTV has lost money on “Sunday Ticket” for many years. At its current $300 price point, DirecTV would need 5 million subscribers to break even. DirecTV has averaged closer to 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

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have argued “Sunday Ticket” has become increasingly diluted over the years as the NFL removes Sunday games and adds Thursday, Saturday and Monday Night games.

Still, DirecTV was willing to use “Sunday Ticket” as a loss leader if it turned subscribers into year-long 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 7-month-long offseason.

Why Amazon makes sense

The NFL may be able to significantly expand the audience for “Sunday Ticket” by separating the product from DirecTV. The satellite-TV provider only allows customers to stream “Sunday Ticket” without becoming a DirecTV customer if they live in areas where they don’t have access to DirecTV. A streaming service would allow anyone access to “Sunday Ticket” without the additional restriction of having to switch one’s pay-TV provider to DirecTV. That could unlock the product to millions of Americans who buy cable TV service bundled with broadband. DirecTV doesn’t offer high-speed Internet service.

Amazon also has an ancillary business it wants to push to “Sunday Ticket” subscribers: an Amazon Prime membership. Amazon’s video strategy has long revolved around getting people hooked on Prime. In its efforts to be “The Everything Store,” Amazon can use live sports to make a direct connection to fans who are also interested in buying sports merchandise. Amazon has reached agreements with Major League Baseball’s New York Yankees and Major League Soccer’s Seattle Sounders in the past year as it tries to make an audience connection with Prime Video and live sports.

Amazon also hopes to extend Prime Video’s business with its pending $8.45 billion acquisition of MGM and its “Thursday Night Football” purchase to build a burgeoning advertising business, which grew 87% year-over-year in the second quarter to more than $7.9 billion. While Amazon still trails digital advertising behemoths Facebook and Google in U.S. market share, the company grabbed 10.3% of U.S. digital ad dollars last year, up from 7.8% in 2019, according to a report from research firm eMarketer.

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

Buying live sports rights also allows Amazon to expand its business while regulators crackdown on big technology acquisitions. Amazon has previously been able to grow into new businesses by acquiring companies Whole Foods, Ring and Zappos. That avenue may be temporarily restricted as new FTC Chair Lina Khan, who has been publicly critical of 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 assisted with this story.

(Disclosure: NBCUniversal is the parent company of CNBC.)

WATCH: NFL commissioner Roger Goodell on Verizon partnership, “Sunday Ticket”



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