NFL Sunday Ticket will play a big role in whether or not AT&T's $48.5B acquisition of DirecTV moves forward. The companies said that AT&T can back out of the deal if DirecTV fails to renew the NFL's out-of-market package at a good price. Sources have told THE DAILY that the NFL's exclusive negotiating window with DirecTV has ended, but the NFL has not engaged other companies in serious negotiations, making it likely that the satellite distributor will renew. DirecTV CEO Michael White told investors this morning that he is confident a Sunday Ticket deal will be finalized before the end of the year. AT&T's acquisition will be closely watched by several sports channels, which have been unable to cut a deal with DirecTV so far, including SEC Network, Pac-12 Networks, Comcast SportsNet Houston and the Dodgers' Time Warner Cable SportsNet L.A. The AT&T-DirecTV deal will not have an immediate effect on those channels, as the regulatory approval process is expected to take at least one year. Morgan Stanley predicted the acquisition would pass regulatory muster. So far, there has not been material opposition from the regulators after news of a potential deal was disclosed by the media." (John Ourand, Staff Writer).
: CNBC’s David Faber said, "Although many of us have been saying, ‘Well, wouldn't conceivably Dish be perhaps a better alternative?’ I got a lot of pushback last night from Randall Stevens the company’s Chairman and CEO about that when I brought it up with him in a phone conversation we had saying, ‘Dish was never the preferred alternative.’ In fact, DTV is better for any number of reasons, including its premier contract relationships such as 'NFL Sunday Ticket,' although we find out, this deal is predicated on them making sure they renew it. ... Both sides tell me that they have great comfort that they are going to get the NFL deal done. If it doesn’t, AT&T can conceivably walk." CNBC’s Jim Cramer said, "The NFL is going to raise the rates on this package so great that I would think that companies with only $60 billion in cash -- we know who that is -- can be able to bid on these things." Cramer: "I’ll drop DirecTV the moment that they cancel the package. ... Why the heck would you ever take that thing? That old-fashioned technology that works slow and every single time there’s a storm, you’ve got to get on the phone. ... This is the most antiquated technology. Believe me, if it were really great, Apple and Google, Facebook would be in there saying we want to take some of this down." Cramer said of the Sunday Ticket package, "DirecTV, you cannot live without that in the sports bar business" (
“Squawk on the Street,” CNBC, 5/19).
MONSTER MASH: YAHOO SPORTS' Jeff Passan writes everybody in the TV industry "agrees: DirecTV, the satellite giant, sets the standard with sports programming -- and should continue to do so even after its purchase by AT&T over the weekend." Once it agrees to a carriage deal with TWC for the Dodgers RSN -- SportsNet L.A., the "rest of the providers fall in line and do the same." For TWC to promise the Dodgers an average of more than $330M a season for the next 25 years "without even a soft carriage agreement in place with DirecTV is malpractice, a monster bet on an audience it clearly did not understand" (SPORTS.YAHOO.com, 5/19).
POWER PLAY: In N.Y, de la Merced & Gelles in a front-page piece wrote AT&T with the DirecTV deal is "trying to tilt the balance of power with media companies as the market for broadband Internet and video shifts." AT&T "becomes the latest telecommunications giant seeking to establish an even greater reach." BTIG Research Managing Dir of Media & Technology Analyst Rich Greenfield said, "The media chessboard is moving more this year than it has in the past decade. You’re seeing major shifts. Everyone is jockeying for position." For consumers, the acquisition "may change little, at least at first, since AT&T and DirecTV share little overlap." AT&T "has about 5.7 million TV customers through its U-verse service, while the satellite TV operator has about 20.3 million" U.S. customers. The acquisition "would also bring to AT&T DirecTV’s existing content at a time when AT&T has made video services a priority." DirecTV's holdings also include a minority stake in MLB Network (N.Y. TIMES, 5/19). BROADCASTING & CABLE's Michael Farrell wrote the deal "will create a more formidable rival" to Comcast/TWC (BROADCASTINGCABLE.com, 5/18). In L.A., Joe Flint writes traditional media and telecomm companies "are bulking up to compete against the giants of Silicon Valley, including Google, Apple, Netflix and Amazon" (L.A. TIMES, 5/19).
MARKET RESPONSE: At presstime, shares of AT&T were trading at $36.36 per share, down 1.03% from the close of business Friday. Shares of DirecTV were trading at $84.97, down 1.40% (THE DAILY).
