Amazon is likely to be the first leader in the NFL Sunday Ticket multidisciplinary offering: sources

Amazon is in negotiations to acquire the rights to the National Football League’s “Sunday Ticket” package and is seen as the first person to engage in talks with the league, according to people familiar with the matter.

Amazon has a strong interest in the multi-year package of games out of the market, people said, who asked not to be named because the discussions are private. Amazon, in May, agreed to pay about $ 1 billion a year to become the exclusive provider of Football Night Thursday games starting next year. That deal made Amazon Prime Video the first real-time streaming service to own an NFL-exclusive streaming package.

An Amazon spokesman declined to comment on the “Sunday Ticket” discussions.

The NFL is expected to ask for $ 2,000 to $ 2.5 billion a year for the package and wants to end discussions before the season ends in February, two of the people said. “Sunday Ticket” has been owned by DirecTV for the past 27 years. Talks are moving forward with stakeholders, suggesting the league is approaching choosing a new supplier, people said.

DirecTV, which AT&T created as a new company last month, renewed “Sunday Ticket” in 2014 for eight years. The current contract ends after the 2022-23 season.

NFL Commissioner Roger Goodell told CNBC on Wednesday that the off-market gaming package “may be more attractive on a digital platform,” as streaming platforms continue to add subscribers at the expense of traditional pay-TV . Goodell also suggested to CNBC that the league is looking for a strategic partner to acquire not only “Sunday Ticket” rights, but also to invest in the NFL network, which broadcasts NFL content year-round, and in the NFL. RedZone, which shows live footage of the game’s action when teams are about to score touchdowns. The NFL currently owns NFL Network and NFL RedZone.

Amazon has competition for Sunday party rights. ESPN President Jimmy Pitaro told Bloomberg this week that “Sunday Ticket” is “an incredibly valuable product” and acknowledged that Disney has held exploratory talks with the league. The news news site reported that Apple has also expressed interest in the package. According to someone familiar with the matter, NBCUniversal’s Peacock is not expected to bid for the rights.

Several media executives involved in the discussions told CNBC that they considered Amazon as the favorite to win the package rights. NBC News reported Amazon and ESPN’s first interest in the package in July.

DirecTV continues to consider its options, but may not have the balance to compete with Amazon or Apple, whose market valuations are close to or above $ 2 trillion, two of the people said.

DirecTV has paid about $ 1.5 billion annually for “Sunday Ticket” over the past seven seasons and currently charges about $ 300 for the package as a supplement. The satellite TV provider now also offers “Sunday Ticket” as part of its “Choice”, “Ultimate” and “Premier” pay-TV packages.

DirecTV has been losing money with “Sunday Ticket” for many years. At its current price of $ 300, DirecTV would need five million subscribers to match. According to someone familiar with the matter, DirecTV has promoted nearly 2 million subscribers to “Sunday Ticket” on average for many years. DirecTV executives and its majority owner AT&T have argued that “Sunday Ticket” has become increasingly diluted as the NFL eliminates Sunday games and adds Thursday, Saturday and Monday night games.

Still, DirecTV was willing to use “Sunday Ticket” as a loss leader if it turned subscribers into satellite TV customers for a year. That way, the company could recover some of its losses by charging monthly pay-TV rates during the NFL season and its seven-month low season.

The NFL may be able to significantly expand the “Sunday Ticket” audience by separating the DirecTV product. The satellite TV provider allows customers to broadcast “Sunday Ticket” without becoming a DirecTV customer only if they live in areas where they do not have access to DirecTV. A broadcast service would allow everyone to access “Sunday Ticket” without the additional restriction of having to switch to pay-TV provider DirecTV. This could unlock the product to millions of Americans who buy cable TV services included with broadband. DirecTV does not offer high speed internet service.

Amazon also has an ancillary business that wants to boost “Sunday Ticket” subscribers: a membership in Amazon Prime. Amazon’s video strategy has long revolved around getting people hooked on Prime. In its efforts to be “The Everything Store,” Amazon can use live sports to establish a direct connection with fans who are also interested in buying sports products. Amazon has reached agreements with the New York Yankees of Major League Baseball and the Seattle Sounders of Major League Soccer last year as it tries to establish an audience connection with Prime Video and live sports.

Amazon also hopes to expand Prime Video’s business with its $ 8,455 million MGM pending acquisition and purchase of “Thursday Night Football” to build an expanding advertising business, which grew 87% year-over-year in in the second quarter to exceed $ 7.9 billion. While Amazon continues to track the big digital advertisers Facebook and Google in U.S. market share, the company earned 10.3% of U.S. digital advertising dollars last year, up 7.8% in 2019, according to a report by research firm eMarketer.

Amazon Web Services has also been the NFL’s technology provider in the development of Next Gen Stats, which has analyzed and stored data on all NFL players and has been playing since 2017. The NFL has a history of working with dissemination with which it has established relations. The league renewed broadcast deals with all of its existing media partners earlier this year. While Apple’s purchasing power rivals Amazon, Apple doesn’t share the same history of relationships with the NFL.

Buying sports rights live also allows Amazon to expand its business while regulators crack down on major technology acquisitions. Previously, Amazon has been able to become new business by acquiring Whole Foods, Ring and Zappos companies. This pathway may be temporarily restricted as new FTC President Lina Khan, who has been critical of Amazon’s growing market power and influence in the economy, examines Amazon’s offerings. The way regulators see MGM’s pending Amazon deal will be a window into Khan’s thinking.

– CNBC’s Jabari Young helped with this story.

Disclosure: NBCUniversal is the parent company of CNBC.

SEE: NFL Commissioner Roger Goodell, in collaboration with Verizon, “Sunday Ticket”