The NFL Needs to Punt Sunday Ticket Away From DirecTV
PORTLAND, Ore. (TheStreet) -- The NFL is a $10 billion business with just one obstacle standing between it and a bigger payday: DirecTV's NFL Sunday Ticket.
There is absolutely no reason the league should continue to give DirecTV exclusive rights to one of its most potentially lucrative television properties -- especially with so many other options at its disposal.
DirecTV is in the final year of a deal with the National Football League that paid the league $1 billion per season for the rights to its NFL Sunday Ticket package that includes all out-of-market games, a channel of stats and scores, a mix channel featuring up to eight games at once, a channel that cuts games down to their most-essential 30 minutes, the RedZone channel of scoring drives and a fantasy football channel. The service also allows customers to stream games through their computer or mobile device, depending on the package a customer purchases.
Since 1994, DirecTV has had sole access to NFL Sunday Ticket and held onto it as other sports leagues developed out-of-town subscription packages of their own. Major League Baseball, The National Basketball Association, The National Hockey League and even Major League Soccer now offer such packages through various cable, satellite, Internet and wireless providers and allow fans to stream those games to any device they wish.
This was a great agreement 20 years ago when widely available satellite television was a technological frontier and an exciting way to reach new audiences. The NFL could give DirecTV rights to Sunday Ticket for as little as $700,000 a year and just watch the ratings pile up. It wasn't even such a bad option in 2009, when mobile technology and streaming were still fairly new concepts the NFL could dabble in with help from DirecTV.
Now, the Sunday Ticket deal is a lopsided arrangement. Approximately 2 million DirecTV subscribers, or 10% of the total, buy either the $240-a-year basic Sunday Ticket package or the $330-a-year Max package. Meanwhile, according to media research firm SNL Kagan, 80 million customers subscribe to cable or satellite providers that aren't DirecTV. Even if only 10% of that audience subscribed to NFL Sunday Ticket, it would quadruple DirecTV's Sunday Ticket subscriber base.
But that assumes the NFL would want to expand into a shrinking industry. As SNL Kagan reported this year, cable and satellite subscriptions fell for the first time in 2013. Cable and satellite providers lost 251,000 subscribers last year. Though research firm IHS notes that DirecTV and Verizon actually gained subscribers in 2010, other cable and satellite customers lost more than 2 million customers combined.