Amazon expected to be top favorite for multi-year NFL Sunday ticket offering: sources

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

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

Amazon has serious interest in a multi-year off-market gaming package, said the people, who declined to be named because the discussions are private. Amazon agreed in May to pay around $ 1 billion a year to become an exclusive supplier of Thursday night football games starting next year. The deal made Amazon Prime Video the first streaming service to have an exclusive NFL streaming package.

An Amazon spokesperson declined to comment on the “Sunday Ticket” discussion.

The NFL expects to ask $ 2-2.5 billion a year for the package, two people have said and want to end the discussion before the end of the season. “Sunday Ticket” has been owned by DirecTV for 27 years. People said discussions with interested parties are progressing, suggesting the league is moving closer to choosing a new supplier.

DirecTV, which AT&T introduced as a new company last month, renewed its “Sunday Ticket” for eight years in 2014. The current contract expires after the 2022-2023 season.

NFL Commissioner Roger Goodell told CNBC on Wednesday that off-market Sunday gaming packages “are likely to be more attractive on a digital platform,” as streaming platforms continue to add customers to the market. detriment of traditional pay television. Goodell also suggested to CNBC that the league was looking for a strategic partner to not only acquire the rights to the “Sunday Ticket” but also invest in the NFL Network, which broadcasts NFL content throughout the year, and the NFL. RedZone, which shows live footage of in-game action when teams are about to score a touchdown. The NFL currently owns both NFL Network and NFL RedZone.

Amazon is competing for the rights to Sunday games. ESPN chairman Jimmy Pitaro told Bloomberg this week that “Sunday tickets” are “an incredibly valuable commodity” and acknowledged that Disney was in exploratory talks with the league. The news site Information reported that Apple has also expressed interest in the package. According to a person familiar with the matter, NBCUniversal should not bid for the rights to Peacock.

Several media officials involved in the discussion told CNBC that they see Amazon as the frontrunner to win the rights to the package. NBC News reported early interest from Amazon and ESPN in the package in July.

DirecTV’s mandate

DirecTV is still considering its options, but might not have the track record to compete with Amazon or Apple, which have a market valuation of near or over $ 2,000 billion, the two said.

DirecTV has paid around $ 1.5 billion per year for “Sunday tickets” over the past seven seasons and currently charges around $ 300 for packages as add-ons. The satellite TV provider now also offers “Sunday Tickets” as part of its “Choice”, “Ultimate” and “Premier” pay TV packages.

DirecTV has been losing money on “Sunday Tickets” for several years now. At its current price of $ 300, DirecTV would need 5 million subscribers to break even. According to someone familiar with the matter, DirecTV averages about 2 million “Sunday Ticket” subscribers over several years. Officials at DirecTV and its majority owner AT&T have argued that the “Sunday Ticket” has become increasingly diluted over the years, with the NFL removing Sunday games and adding Thursday, Saturday and Monday night games. .

Nonetheless, DirecTV was willing to use “Sunday Ticket” as a leading product if it turned its customers into year-round satellite TV customers. This way the company can make up some of its losses during the NFL season by collecting monthly pay TV fees and during its seven months off season.

Why Amazon makes sense

The NFL may be able to significantly expand the audience for “Sunday tickets” by separating the product from DirecTV. The satellite TV provider allows customers to broadcast “Sunday Tickets” without becoming a DirecTV subscriber only if they live in areas where they do not have access to DirecTV. A streaming service allows anyone to access “Sunday Tickets” without the added restriction of switching from their pay TV provider to DirecTV. This could unlock the proceeds for the millions of Americans who purchase broadband cable TV service. DirecTV does not provide high speed Internet service.

Amazon also has a subsidiary that it wants to reach “Sunday Ticket” customers: an Amazon Prime subscription. Amazon’s video strategy has long revolved around connecting people to Prime. In its efforts to become “The Everything Store,” Amazon may use Live Sports to establish direct connections with fans interested in purchasing sporting goods. Amazon has made deals with the New York Yankees of Major League Baseball and the Seattle Sounders of Major League Soccer over the past year as it tries to engage viewers with Prime Video and live sports.

Amazon also plans to expand Prime Video’s business with a pending $ 8.45 billion MGM acquisition and “Thursday Night Football” purchase to create growing advertising business, which grew 87% year-on-year. in the second quarter to reach 7.9%. exceeded one billion dollars. According to a report by research firm eMarketer, Amazon still lags behind Facebook and Google’s digital advertising in terms of market share in the United States, but the company reaped 10.3% of US dollars of digital advertising last year, up from 7.8% in 2019.

Amazon Web Services has also been the technology provider to the NFL in the development of Next Gen Stats, which has analyzed and stored data on every NFL player and game since 2017. The NFL has always worked with broadcast partners with which she has established relationships with. The league resumed broadcast agreements with all of its existing media partners earlier this year. While Apple’s purchasing power rivals that of Amazon, Apple doesn’t share the same relationship history with the NFL.

Buying live sports rights allows Amazon to grow its business as regulators crack down on big tech acquisitions. Amazon has already been able to expand into new businesses by acquiring the companies Whole Foods, Ring and Zappos. This avenue may be temporarily restricted as new FTC President Lena Khan, who has criticized Amazon’s growing market power and its impact 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 Jabri Young helped 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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