DirecTV can’t get enough of the NFL. They just announced an extension of the venerable NFL Sunday Ticket package on DirecTV through the 2014 football season. And apparently, the recession had no impact on the negotiations, since DirecTV is paying 43% more for the rights, to the tune of $1 billion per season. The previous agreement paid the NFL $700 million per year. Looks like the NFL salary cap might get a boost. The new agreement may slightly open the door for DirecTV competitors. The ‘Red Zone’ channel, which offers ‘mini-coverage’ of in progress games when teams are in scoring position may also be made available to non-DirecTV distributors.
DirecTV has shrewdly leveraged sports packages like this to effectively compete with cable and telcoTV players. In fact, you could argue that DirecTV has proven that bundling and triple play packages are not absolutely necessary to compete. They’ve done more than hold their own, despite the lack of a broadband or voice component. We would argue that NFL Sunday Ticket and other sports packages, including NASCAR HotPass, contribute considerably to that competitive positioning. The new agreement also broadens the broadband version of Sunday Ticket, DirecTV Supercast, allowing DirecTV to market the Internet delivered version to customers who cannot access a DirecTV satellite signal, starting in 2012 (as a side note, the broadband version makes for an interesting debate about network neutrality – should DirecTV’s competitors be able to block a DirecTV programming package being delivered over their broadband network?). “This latest extension allows us to retain and broaden our most popular sports subscription service. Through our wireless offering to NFL SUNDAY TICKET (TM) customers and the new broadband service to non-customers, we’re now able to expand the reach to even more NFL fans everywhere,” said DirecTV CEO Chase Carey in a company statement.
I agree about the net neutrality issue. Why should a competing video provider to DirecTV, who also offers broadband, have to offer the broadband version of sunday ticket over its network for free? Those customers will pay DirecTV for the broadband version, yet view it over a non-DirecTV connection.
Isn’t that analagous to CBS offering NBC content over its network. They would never do that. Why should broadband providers have to do the equivalent?