Wednesday, January 27, 2021

HOW THE NFL BENEFITED FROM DIRECTV/AT&T DEAL

October 3, 2014 by · Leave a Comment 

The NFL was able to take advantage of a contingency clause in AT&T’s deal to acquire DirecTV that resulted in a $4-billion windfall for the football organization. As part of the AT&T agreement, DirecTV had to guarantee that it would continue to carry NFL Sunday Ticket, a package of Sunday afternoon out-of-market games. It had been paying the NFL $1 billion a year for rights to carry the games, but the NFL succeeded in boosting that fee to $1.5 billion a year for eight years, a 50-percent boost. The new deal also includes Internet rights — something not particularly appealing to DirecTV which offers only a relatively primitive Internet service via satellite (mostly to rural areas), but would be especially valuable to AT&T, which boasts 16.5 million wired broadband subscribers and 58 million wireless smartphone customers. Shareholders had reportedly worried that if the NFL deal was not closed, the merger, worth $48.5 billion, would collapse. (AT&T has agreed to pay $95 a share for the satellite company, a premium over the current share price of about $87. If the deal broke down, investors feared that the stock could retreat as much as 20 percent.) The deal still faces regulatory approval, which is by no means certain.