According to AllThingsD, Google Inc (NASDAQ:GOOG) is having informal conversations with NFL representatives regarding the possibility of buying the rights to NFL’s Sunday Ticket package. It’s still too early to tell if a deal with ultimately go through, but it sounds like a smart move which could be a game changer for the company and the future of TV.
Deep pockets
The NFL Sunday Ticket package, an exclusive out-of-market package that allows viewers to watch nearly every game on the NFL schedule on Sundays, is currently owned by DIRECTV (NASDAQ:DTV). But that contract is set to expire at the end of 2014, so the NFL has started talking with potential bidders, and Google Inc (NASDAQ:GOOG) seems to be interested in that discussion.
AllThingsD reports that Google Inc (NASDAQ:GOOG) CEO Larry Page and YouTube content boss Robert Kyncl met with a delegation from the NFL led by commissioner Roger Goodell to discuss the possibility of buying the rights to Sunday Ticket package among other things.
DIRECTV (NASDAQ:DTV) has held the rights to Sunday Ticket since the league introduced the package in 1994. The satellite TV company is currently paying $1 billion per year , and management has stated that they would be willing to consider a nonexclusive deal if the price for renewal becomes too high.
Sunday Night Ticket is a key differentiator for DIRECTV (NASDAQ:DTV), but at the same time it’s a money loser on a stand-alone basis since it has nearly 2 million subscribers paying between $200 and $300 per year. DIRECTV is facing lackluster subscriber growth in the U.S. lately, and the company is putting profitability over expansion in its home market, so it needs to keeps costs under control.
DIRECTV (NASDAQ:DTV) paid a 40% increase for the last renewal, and the NFL has obtained big increases with other partners like CBS, Fox, and NBC, so it will be looking for a material raise in this case, too.
Especially in the context of a bidding war, prices may become too steep for DIRECTV, and maybe a nonexclusive deal would provide a convenient alternative for both Google Inc (NASDAQ:GOOG) and DIRECTV (NASDAQ:DTV) to have the rights to Sunday Night Ticket for a reasonable cost.
In any case, Google Inc (NASDAQ:GOOG) has much deeper pockets than DIRECTV (NASDAQ:DTV). If the company is willing to pay the price, it can certainly afford to do outbid the competition.
Google and the future of TV
Major tech companies like Google, Apple, and Microsoft are actively competing against each other over the future of TV with different devices bringing the Internet and apps to the living room, while others like Netflix and Amazon are more focused on the content side of the equation.
TV is the new battleground in the tech war, and a deal with the NFL could put Google Inc (NASDAQ:GOOG) in a position of remarkable strength to fight this battle on several fronts at the same time.
The company has not achieved much success with Google TV, but the recently launched Chromecast — a $35 dongle that plugs directly into TV sets and streams video and other digital content from mobile devices — has received mostly positives critiques so far.
