YouTube Outbids Amazon Prime Video And ESPN+ For NFL Sunday Night Ticket

After DIRECTV made it clear it had no intention of renewing its deal for the NFL Sunday Night Ticket package, which had been bleeding red ink for years, analyst attention shifted to growing online video services. AlphabetGOOGL
Inc.’s YouTube division won the bidding, and is paying an average of $2 billion/year, 33% above the $1.5 billion/year DIRECTV had paid.

The NFL had been looking to expand into a growing footprint, with cable and satellite operators bleeding subs due to cord cutting (moving to online video) and cord shaving (downgrading to a cheaper package). Clearly, cable and satellite platforms were no longer an option for this niche football service.

“I don’t know if it’s so much a changing of the guard, but an expansion of distribution and an expansion of the ways in which fans can interact with our sport and our league,” Dhruv Prasad, SVP Media Strategies and Strategic Investments for the NFL, told The Hollywood Reporter. “There’s no question that digital platforms have only increased in audience over the last several years and our interest at the NFL is getting our content in front of as many as fast as possible…” he said.

Many had thought that Amazon Prime Video would be the top bidder, which would give it the ability to bundle it into the video service and then jack up prices to pay for it. They have already picked up the Thursday night package of games, which would make it a natural fit.

However, according to www.sportsbusiness.com, the deal with AppleAAPL
fell apart because it wanted to pay less so it could offer the product at lower prices than DirecTV had been paying. Contracts that the NFL had with CBS and FOX would have prohibited such a transaction. Also impacting the decision was the size of YouTube, which has 2.5 billion monthly streaming users.

Walt DisneyDIS
was also said to be in the bidding pool, trying to pick up the rights for its fast-growing ESPN+ service. However, it’s still small in size compared to YouTube so that obviously would have an impact.

DIRECTV’s contract for the service which allows consumers to watch all Sunday afternoon games for out-of-market teams, expires at the end of the season. DIRECTV had commercial and residential rights and YouTube only picked up residential rights. These commercial rights could be sold for another $200 million, bringing the rights fees up 46% to $2.2 billion.

To monetize the cost YouTube wiil be offering it as an add-on to YouTube TV and in the main app through a service called Primetime channels where you can subscribe to individual channels, although the company would not identify how much the add-on would cost.

In the a la carte option on YouTube Primetime Channels you will be able to subscribe only to Sunday Ticket without having a YouTube TV Subscription.

Next up for the NFL will be adding a partner for NFL Media, which includes both the linear cable networks NFL Network and RedZone, as well as the website NFL.com. The league had been attempting to package NFL Media with the NFL Sunday Ticket packages, but the outlook for linear cable networks is fairly bleak and it was unable to negotiate such a package.