No ‘NFL Sunday Ticket’ for Cable11/09/2004 3:07 AM Eastern
Call it Rupert Murdoch's prevent defense.
DirecTV Inc., looking to keep cable locked at the line of scrimmage, has tackled the exclusive rights to the National Football League’s “NFL Sunday Ticket” out-of-market package through 2010 via a five-year, $3.5 billion deal.
The DirecTV announcement came in concert early Monday evening with NFL agreements with Sunday-afternoon incumbent carriers Fox and CBS, valued at a combined $8 billion, through the 2011 season.
Fox’s National Football Conference contract averages $712.5 million per season, a 30% jump from its current deal, while CBS will pay $622.5 million, 25% more per campaign, to retain its American Football Conference connection. Each network will televise a pair of Super Bowls during the life of their new pacts.
Valued at some $700 million per season from 2006-2010, the direct-broadcast satellite deal, a 75% hike from current rates, again shuts cable out of sports’ most lucrative pay-per-view package -- one that has helped DirecTV, which Murdoch's News Corp. now owns a controlling interest in, become a distribution powerhouse over the past decade.
Sources familiar with the negotiations said cable companies had an opportunity to get a piece of Sunday Ticket, but they balked at the high price.
Under the current deal -- which DirecTV signed late in 2002 and was slated to extend through the 2007 season -- the DBS leader was paying an annual rights fee of $400 million. It should be pointed out, though, that DirecTV did not hold exclusivity for the 2006 and 2007 seasons under the previous pact. DirecTV’s new contract supercedes the remaining years on the previous deal.
The NFL's current deal with the broadcasters ends after the 2005 season with CBS, Fox, ESPN and ABC paying a combined $17.2 billion over an eight-year span.
The pro-football league, at press time, had not yet come to terms on its primetime packages, currently held by ABC and ESPN.
Those packages could be complemented by an additional primetime cable offering late in the season that evidently would meld games on Thursday nights after Thanksgiving with Saturday-afternoon games that are presently televised by CBS and Fox.
"As we've said, our intent is to retain the Monday- and Sunday-night packages, and we will continue our ongoing conversations towards that end," ESPN and ABC Sports president George Bodenheimer said.
Under the new agreement, DirecTV officials said, the DBS provider will offer a premium NFL Sunday Ticket package that will feature enhanced applications, interactive features and expanded programming.
One such play: a new "Red Zone" channel that will take viewers from game to game when teams are poised to score. The premium package will also provide viewers with the ability to index, search for and view plays of a specific NFL player, team or play type from games played that Sunday.
Additionally, DirecTV subscribers with digital-video recorders who currently receive the highlights-on-demand feature will receive expanded and unique NFL-related content and highlights downloaded to their DVR hard drives.
DirecTV will also have the right to provide remote access to games and content via broadband or wireless devices.
And the DBS giant has gained the exclusive opportunity to develop and distribute, for the first time, enhanced and exclusive versions of NFL postseason games, including the Super Bowl.
All games will be produced in high-definition format.
To that end, both CBS and Fox executives said HD will become the norm for all of their games in the new deal.
On a conference call announcing the AFC renewal, Viacom Inc. co-chief operating officer and co-president Leslie Moonves would not address specific outlays, other than to say that Fox paid more for the NFC package, which is home to the bigger TV markets.
Moonves said CBS was thrilled with the new deal. Asked about profit prospects, he noted, "We're making money now and we will make more on the new deal." CBS pays an average of $500 million per year on its extant contract.
Officials at Fox -- which has taken writedowns on its current NFL deal, valued at some $550 million per year -- also professed that finishing in the black will be part of its new pro-football playbook.
News Corp. president Peter Chernin, speaking on a conference call, said Fox’s existing contract was hurt by the burst of the dot-com bubble and Sept. 11, but Fox expects to be profitable between the network and its owned-and-operated stations
"The NFL doesn't want its partners losing money," he added. "That was a basic tenet of the negotiations. I know we're looking seven years into the future, but both sides think we can avoid those kinds of losses, and it allows the NFL to get its advances."
Both CBS and Fox officials acknowledged that the new deals contained provisions for flexible scheduling that could afford the primetime carriers the right to select games late in the season. In recent seasons, there has been talk about giving ABC a chance to select from CBS’ or Fox's pool of Sunday games in the hopes of televising better matchups on Monday Night Football.
Chernin said Fox worked very closely with the NFL in trying to bolster the Monday-night package and "protecting our ratings. I think we reached a place in the middle."
Chernin stiff-armed a question about Fox having interest in any of the NFL primetime packages.
"We're happy with what we achieved today,” he said. “We might have a series of discussions if anything else makes sense. But all of our attention and analysis has been against the most valuable package in sports."
News Corp. chairman Murdoch has said that the only way the company would pursue a new national cable network would be with the NFL as a centerpiece.
While ABC and ESPN hold exclusive negotiating rights for their existing packages until next October, the NFL wants to conclude TV matters shortly.
Other possible players in the mix include NBC and its general-entertainment cable channel, USA Network, along with Turner Network Television and Comcast Corp.
Some observers suggested that if ABC passes on MNF, ESPN could switch over to that night, thereby opening the door to a split-season Sunday-night scenario.
Others contended that the league-owned NFL Network could be in line for some contests -- or, at the worst, that its presence affords the league further negotiating leverage.
As part of the DirecTV deal, NFL Network’s carriage deal with the DBS carrier was extended, as well.