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SBD/Issue 129/Sports Media
DirecTV's NFL Sunday Ticket Renewal Includes Wider Distribution
Published March 24, 2009
INSIDE THE DEAL: On Long Island, Neil Best writes the deal keeps Sunday Ticket "from cable companies that have coveted it for years" (NEWSDAY, 3/24). But the HOLLYWOOD REPORTER's Georg Szalai notes the Red Zone Channel "will now go nonexclusive" after being part of DirecTV's package for four years (HOLLYWOOD REPORTER, 3/24). The WALL STREET JOURNAL's Matthew Futterman notes the deal is a "sign that media rights for major sports may defy the recession." The deal "chips away at DirecTV's exclusivity when it comes to out-of-market games," though the NFL "still needs to reach agreements with cable and broadband providers on the price and access to the Red Zone Channel" (WALL STREET JOURNAL, 3/24).
DEAL TO BE PAID DURING WORK STOPPAGE: SI.com's Peter King cites a source as saying that the NFL/DirecTV deal "calls for the league to be paid the billion-dollar rights fee ... even if games are not played in 2011" due to a work stoppage. King notes by announcing the deal "so far in advance of its effective date ... the NFL is showing the players that it has a war chest and won't be pressured into making a deal it doesn't want just for the sake of avoiding a work stoppage in 2011." King: "This will be a huge factor in the looming negotiations, one that clearly will make the league not as desperate to resolve a simmering dispute with the players that began when owners opted out of the current collective bargaining agreement last year" (SI.com, 3/24). An NFL source said that the deal will "provide the owners with more than [$30M] per team in working revenue even in the event of a lockout." The source: "That allows us the juice to have a lockout from a cash flow point of view, if that's necessary" (BOSTON HERALD, 3/24).
A RISK FOR DIRECTV: Bernstein analyst Craig Moffett in an e-mail said the deal carries significant risks for DirecTV, which he suggested would have to increase the service's price to pay for a deal estimated at $4-4.5B over four years. "DirecTV would need to acquire (or retain) about 400 to 450K incremental subscribers by 2012 who are solely attributable to the NFL Sunday Ticket package in order to break even on the contract," he wrote. "We believe finding these incremental subs will prove increasingly difficult, as uptake among consumers that want this package must already be quite high, and bar and restaurant penetration is likely near saturation" (John Ourand, THE DAILY). CNBC's Darren Rovell: "If you have something that’s good even in this economy now, you’re going to keep it and you might even raise the ante a little bit” (“The Kudlow Report,” CNBC, 3/23).
MISSING MAN: NEWSDAY's Best noted NFL Network's Adam Schefter "hasn't blogged on NFL.com since March 3, hasn't appeared on 'Total Access' since March 6 and now is nowhere to be seen at the owners' meetings in California." Schefter: "I'm under contract to NFL Network until the middle of August, and I've been very happy there and I'm hoping we can work things out." Best: "So it appears there is a lack of an agreement on the financial terms of a contract extension" (NEWSDAY.com, 3/23).