DirecTV Retains Key NFL Package

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DirecTV Inc. will remain the exclusive carrier of the popular "NFL Sunday Ticket" out-of-market games at least through 2005, signing a new five-year, $2-billion agreement with the National Football League.

Sources said the cost for the direct-broadcast satellite provider to keep this key programming away from cable rose from $130 million to $400 million per year.

The package, retailing at $159, generated around 1.5 million buys in 2002, according to sources. And DirecTV CEO Eddy Hartenstein said Sunday Ticket isn't a subscriber-driving "loss leader:" He claimed DirecTV would turn a profit on the deal despite a high license-fee increase.

The package's price, which ranges from $139 to $199, will hold for at least the next year, he said.

Window in '05

DirecTV will have exclusive DBS rights to the package through 2007, leaving competitor EchoStar Communications Inc. standing on the sidelines. Cable operators, though, will have another shot to secure distribution of the 14-game-a-week package in 2005, when the current $18.3 billion NFL TV deal with ABC, Fox, CBS and ESPN expires.

Apparently, cable didn't have much of a chance to bid this time on Sunday Ticket. "The NFL never really talked numbers with us," said a disappointed Steve Brenner, president of pay-per-view distributor In Demand LLC. "For the league, it would have been better to have the package on both [DirecTV and digital cable], but the NFL chose not to."

Cable management has made no bones about wanting distribution rights to NFL Sunday Ticket, with such prominent MSO executives like Comcast Corp. CEO Brian Roberts and Time Warner Cable senior vice president of programming Fred Dressler saying cable could match DirecTV and be able to offer a digital-cable package.

As part of the deal, DirecTV next season will carry a new NFL Channel, which initially will air league library product but could be an outlet for live games in the future, and perhaps as a spillover service if the league later opts to run multiple games in its primetime windows.

Digital cable will get a chance to offer the new NFL service, too.

DirecTV also will develop high-definition game telecasts, and provide exclusive enhanced technical innovations, including viewer-selected cameras and replays.

NFL commissioner Paul Tagliabue said the league talked to cable about the package, but remained concerned about a potential oversaturation of its product. Sources said the league could not offer the package to cable unless it gained approval from its TV partners.

"We don't want to move precipitously into multichannel subscriber-supported mediums at the expense of our ability to continue serving the broadest universe of fans on broadcast television," Tagliabue said. "There has to be a balance."

Brenner contended cable was in a better position to protect the broadcasters' interests through local ad-insertion capabilities, ensuring those viewing out-of-market games would get the broadcast network's commercials.

Sunday-afternoon carriers Fox and CBS receive a percentage of Sunday Ticket purchases as a means of compensation for audience dilution.

NFL on digital

Concerning the new NFL Channel, former cable executive Steve Bornstein — who joined the NFL earlier this year as a TV consultant — will remain with the league for the immediate future to work on programming the new service, according to NFL spokesman Brian McCarthy.

The 24-hour channel, offering mostly vintage league programming from the vast NFL library, will be available to digital-cable operators for a fee, although McCarthy said the league has yet to move ahead with any specific licensing plans.

A digital channel offered by the National Basketball Association is currently being offered to operators at around 25 cents per subscriber.

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