Roger Goodell, the commissioner of the National Football League, traveled to Sun Valley, Idaho this summer for Allen & Company’s annual press conference, convinced that the NFL was about to announce his latest blockbuster television rights deal.
“We’ll probably have a decision by the fall,” he told CNBC at the time.
But nearly five months later, the league is still looking for a tech or media company willing to replace DirecTV as the rights holder for Sunday Ticket, which allows fans to watch every NFL game. , not just those broadcast in their region. Negotiations are now expected to drag on into next year, according to five people familiar with the talks.
The Sunday Ticket negotiations were closely watched by analysts and executives. Live sports, especially NFL games, are one of the last staples of traditional television. Who the winning bidder is, how much it pays and how the deal is structured will have seismic implications for the sports, media and technology industries.
Bidding for Sunday Ticket’s prized games bundle could set a precedent for how much tech companies like Apple and Google are willing to pay to attract viewers from traditional TV companies, who still rely on cable subscription fees and advertising to stay afloat.
Sunday Ticket’s competitive landscape changed as the talks dragged on, people familiar with the talks said. Sports and media executives have long seen Apple as the frontrunner, with some involved in the bidding process saying they believe the tech giant has reached a deal.
But in the absence of a deal, Google stepped up its efforts, aiming to win the package for YouTube TV, the company’s cable streaming service, four of those people said. Other interested bidders include Disney’s Amazon and ESPN.
The race to rule TV streaming
Robert Kyncl, chief commercial officer of YouTube, played a key role in the Google lawsuit. Although he will take up a new role early next year as chief executive of Warner Music Group, Mr Kyncl is committed to working with YouTube to complete the deal, three people familiar with the deal have said. its priorities. He has a relationship with Brian Rolapp, the NFL’s business manager, who worked with Mr Kyncl during Google’s unsuccessful bid for Sunday Ticket in 2013.
The league’s negotiations with Apple, Google and others have dragged on as it tries to bundle all of the out-of-market Sunday NFL games with other media assets, including NFL Network and NFL channel RedZone, according to these people.
Last year, the NFL hired Goldman Sachs to help explore selling a stake in these media companies. The decision was partly prompted by the league’s acknowledgment that Sunday Ticket competes for subscribers with the RedZone channel, which cycles back and forth between live football matches on Sundays as teams are about to play. to score touchdowns.
In seeking investors in this channel and other media ventures, the NFL must negotiate how to structure a joint venture with an investment partner who would likely want a say in the operating structure of the joint venture, these people said.
A media executive who has negotiated with both Apple and the NFL cited another reason for the months-long standoff: The two sides have a history of fighting their way through negotiations.
The NFL, Apple, Amazon and ESPN declined to comment. Google did not immediately comment.
The league is asking for more than $2.5 billion a year, an increase of $1 billion from the current eight-year deal, which expires at the end of this season. It wants a long-term rights partner, having locked down its flagship packages last year for games on Thursdays, Sundays and Mondays on 11-year deals.
The slowing economy could create another challenge for the NFL as it tries to secure a deal that could top $10 billion over its lifetime. Tech and media companies are under pressure from Wall Street and investors to cut staff and control spending, a reversal after years of lavish spending.
The downturn has helped embitter some Wall Street analysts over Amazon’s billion-dollar-a-year “Thursday Night Football” deal. Tom Forte, an analyst at DA Davidson, an investment bank, said he was skeptical the company would bring in enough new Amazon Prime members or advertising revenue to cover its costs. He added that Amazon’s struggle to make money meant he was highly unlikely to make a serious offer for Sunday Ticket.
“At a time when tech companies are tightening their belts, it would be shocking to see Amazon spend more on NFL rights given the challenges they’ve already faced,” Forte said.
There is similar skepticism about the viability of an offer from ESPN. Rich Greenfield, an analyst at LightShed Partners, said the return of Robert Iger as chief executive made Disney, which owns 80% of ESPN, more likely to cut ESPN’s costs or sell it. He cited Mr. Iger’s remarks at a conference hosted by Vox Media in September, when he said he was “not optimistic” about some traditional media companies.
Google has also faced pressure to cut costs and thin its ranks. After reporting in October that sales had slowed in YouTube and search, Google executives pledged to halve hiring and cut spending.
But Mr Kyncl said making a deal for Sunday Ticket would not be subject to the company’s belt-tightening, two people familiar with his thinking said. He said it would be a good investment because of the YouTube TV subscribers it would provide, which could rival the estimated two million subscribers DirecTV attributes to its current Sunday Ticket deal.
Apple has avoided a business slowdown for much of the year, but a Covid-19 outbreak at its biggest iPhone factory in China has derailed production and could reduce sales over the Christmas holidays. Still, Tim Cook, Apple’s chief executive, said he believes in investing in a downturn, and a decade-long deal with the NFL would fit that philosophy.
The NFL aggressively sued Apple as a Sunday Ticket partner earlier this year, in part because it didn’t have a major business relationship with the tech giant, three people familiar with the talks said. But the urgency died down after the league reached a deal this fall to make Apple the title sponsor of the Super Bowl halftime show.
As Sunday Ticket talk languished, the NFL focused on a separate search for an independent studio that could help produce and distribute football-related films alongside the league. NFL Films, which makes documentaries and other shows, submitted a proposal that attracted interest from bidders including Sony, A24, North Road and Skydance, the studio that co-produced ‘Top Gun: Maverick’, according to two people familiar with research. .
Mr. Rolapp, who led the negotiations for the league, has met with bidders in recent months and has opted for Skydance Sports, which will team up with the NFL to develop and distribute film and television projects. One of the main goals of the NFL is to market the sport by reaching younger audiences and viewers outside of the United States.
Work on the deal has taken the league’s attention away from talks of Sunday tickets, some of those people said. Only a few senior NFL executives are involved in negotiations with the media, making it difficult for the league to fully engage in numerous simultaneous negotiations. Now that Skydance has been selected, the league is expected to resume Sunday ticket talks.