SBJ Media: Analyst Questions Whether DirecTV Can Keep Sunday Ticket

I am excited to announce that my daughter is taking her talents to Worcester, Mass., this fall where she will be part of the Class of 2023 at Holy Cross – following in the footsteps of Burke Magnus, Amy Phillips, Bill Simmons, Joe House and more.

SUNDAY TICKET'S FUTURE WITH DIRECTV REMAINS MURKY

• AT&T shares fell 4% today following a brutal first quarter report which showed that DirecTV and U-verse lost a combined 544,000 subscribers -- much higher than analyst estimates. Despite those losses, AT&T Chair & CEO Randall Stephenson was optimistic that he would be able to sign an exclusive deal to keep NFL Sunday Ticket on DirecTV.
  
  
• I called one of the smartest minds in the business, financial analyst Craig Moffett, to see whether Stephenson’s optimism was misplaced. Moffett was much more skeptical -- but not because of AT&T’s poor Q1 performance. Rather, Moffett pointed to the increased pressure AT&T is feeling from the bond market and credit ratings agencies as reasons why it’s hard to see AT&T sticking with a money-losing deal -- and Sunday Ticket is known to be a big loss leader for DirecTV. “AT&T is clearly prioritizing free cashflow and debt service over longer term growth,” Moffett said. “In that environment, you really have to wonder how willing AT&T will be to pay up for Sunday Ticket, which is perennially a money loser for DirecTV at least over the short-term in the first couple of years in the contract.”
  
  
• Describing satellite TV as a declining business, Moffett said subscriber losses make it more difficult for DirecTV to figure out how to pay for the NFL out-of-market package. “The only way you get that contract to a breakeven is if you attribute the entire value of the subscription for 10% or so of your customer base that you would assume -- without Sunday Ticket -- would leave. Even doing the calculation internally to figure out what Sunday Ticket is worth will be much harder than it used to be. You will now have legitimate questions about how long you're going to be able to keep any of your customers on a satellite platform that is quickly starting to resemble a burning building.”
  
  
• In my mind, today’s news -- in addition to AT&T’s decision to drop NFL Network and NFL RedZone from U-verse -- makes it less likely that DirecTV will retain Sunday Ticket exclusively -- despite Stephenson’s comments to the contrary.
  
  
  
  

NFL DRAFT TV COLLABORATION/PROMOTION HITS NEW LEVELS

• ESPN’s love affair with the NFL will reach new heights tomorrow night, showing -- yet again -- how much the Disney-owned network wants to remain in business with the shield. Even though ESPN and NFL Network typically are viewed as competitors during the draft, this year the channels will share talent and marketing. For example, ESPN2 will simulcast NFL Net's “Good Morning Football” tomorrow and Friday from 7:00-11:00am. Another example -- NFL Net’s Rich Eisen will appear on ESPN’s “NFL Live” tomorrow, and ESPN’s Kirk Herbstreit and Desmond Howard will appear on NFL Net’s “NFL Draft Kickoff.” This is a level of cooperation that these two have never had.
  
  
• The collaboration will hit the marketing front, too. During Draft coverage ESPN and NFL Net will use the same “Take the Stage” campaign where current players give shoutouts to prospects. Disney will promote the Draft across Disney XD, Freeform, FX, NatGeo, AMC movie theaters and Disney Parks. There will also be Draft promos around ABC shows like "Grey’s Anatomy," "Station 19," "For the People," "Fresh Off the Boat," "Speechless," "GMA," "The View" and "American Idol."
  
  
• As far as the actual Draft goes, ABC’s coverage will be geared toward the casual fan. That means more storytelling about players and their emotional journeys to become college football’s elite. In my house, this is how my wife would watch the Draft. ESPN’s coverage will focus on sports fans. Expect lots of highlights and plenty of commentary. If you want to know how Kyler Murray performed during the cone test or how much Jawaan Taylor can bench press, this is the coverage for you.
  
  
• How will this look? Let’s take Florida State DE Brian Burns, who is projected to be a first-round pick, as an example. When he gets drafted, ABC will show a 40-second vignette where he shows his personality and talks about the superheroes he likes. It will be a different story on ESPN, where producers will run a 55-second clip showing five of his highlights from college, with commentators talking about why the team drafted him and how he will fit in to a particular scheme.
  
  
• There were big audience numbers for last year's first round of the Draft, which was on broadcast TV for the first time. SBJ's Austin Karp notes the viewership for coverage across Fox, ESPN, ESPN2 and NFL Net was at the highest level for the telecast since 2014. If some element of drama remains going into tomorrow night, ABC, ESPN and NFL Net could also draw a big number.
  
  

  NFL DRAFT: FIRST ROUND AUDIENCE TREND
  YEAR	NETWORKS	COMBINED VIEWERS (000)
  2018	Fox, ESPN, ESPN2, NFL Net	11,322
  2017	ESPN, NFL Net	9,226
  2016	ESPN, NFL Net	8,328
  2015	ESPN, NFL Net	8,842
  2014	ESPN, NFL Net	12,373

  Download the NFL Draft 1st Round Audience

SPEED READS

• Christian Bale is a staple in Adam McKay's recent films, including “The Big Short” and last year’s “Vice.” Could the former Batman take on the slick-backed hair of Pat Riley next? With the way Bale transformed to play Dick Cheney, it's a possibility. McKay will step behind the camera for an HBO adaptation of Jeff Pearlman’s book on the 1980s Showtime Lakers. Casting is underway. No word yet on who’ll portray Magic Johnson or Kareem Abdul-Jabbar. Maybe give Joe Buck some spectacles and a shag wig and you've got Kurt Rambis.
  
  
• Tony Kornheiser and Dan Le Batard had an entertaining back-and-forth on the latest “South Beach Sessions” podcast, which started with Le Batard calling Tony a “miserable son of a bitch." Some of Kornheiser's best lines:
  
  
  • On why humor doesn't work in the "MNF" booth: "There’s not enough time. There’s three people in there and you have 30 seconds from play to play."
  • On Le Batard’s claim that he and Michael Wilbon birthed ESPN's weekday afternoon block: “I would say Erik Rydholm had a lot to do with it by harnessing it and directing it, but I’ll take the compliment.”
    
    
• News that CBS extended acting CEO Joe Ianniello’s contract through the end of the year has led insiders to conclude that a CBS-Viacom merger is almost certain to happen. The reason: CBS was having trouble finding interested CEO candidates due to persistent rumors about such a merger. The L.A. Times’ Meg James has a good story on the subject.
  
  
• Foley’s NY Pub unveiled a Nick Cafardo burger on its menu this month, named after the longtime Boston Globe baseball writer who died suddenly in February. Nick’s son Ben, a PR exec with ESPN, visited the pub last week to try the burger. Ben also signed a baseball that is displayed on Foley’s wall. His verdict on the burger: “It is a perfect tribute to my Dad. They made a conscious effort to bring an Italian flavor to it."
  
  
  

  Ben Cafardo (l) visited with Foley's owner Shaun Clancy (r) to check out the new burger

LET'S DO THE NUMBERS

• 420 -- Holes of golf that MLB Network's Eric Byrnes played in a 24-hour span this week -- a new world record. Byrnes took his hacks out at the Ocean Course at Half Moon Bay in California in part to raise awareness for the “Let Them Play Foundation,” which encourages children to play outdoors. In beating the previous world record of 401, Byrnes "offered a clinic in swift play and rarely slowed to set or ponder his next shot."
  
        

Enjoying this newsletter? We've got more! Check out SBJ College with Michael Smith on Tuesdays and Thursdays for insights into all the latest news around the world of college sports.

Something on the Media beat catch your eye? Tell us about it. Reach out to either me (jourand@sportsbusinessjournal.com) or Austin Karp (akarp@sportsbusinessdaily.com) and we'll share the best of it. Also contributing to this newsletter is Thomas Leary (tleary@sportsbusinessdaily.com).