How Google or Apple Could Make Web TV a Reality: Spend Billions on the NFL
Dear Tim, Larry, Steve and Jeff,
I’ve been watching closely as all of you have tinkered with television for the last few years. I can see the attraction: The TV Industrial Complex is a big, lucrative target. It hasn’t ever had real competition.
The problem: So far none of you guys have tried building something that could really shake things up.
But I have a fix! Go buy yourself some football, and stream it over the Web.
Specifically, write a check to the NFL for its “Sunday Ticket” package, the (almost) all-you-can-eat subscription service for America’s most popular sport.
Right now those rights belong to DirecTV. But the satellite TV company’s four-year deal expires at the end of the 2014 season. Which means you should be starting negotiations now.
It won’t be cheap. DirecTV pays $1 billion a year for Sunday Ticket, and that’s up 40 percent from its previous deal. So for argument’s sake, let’s assume you may have to spend something like $1.5 billion a year.
Totally doable, for you guys.* And it’s a real business, too: DirecTV has at least 2 million subscribers for Sunday Ticket, at some $225 a pop.
I bet you could do a lot better, since you wouldn’t require your customers to stick a dish on their roof to get the games — or get pay TV at all. All of those people who say they’d cut the cord if they could get sports? You’re their answer.**
You’ll still lose money on the deal, just like DirecTV does. But think of the upside: You instantly have your hands on the most valuable programming asset in the country, which makes you an instant player — one that can credibly start acquiring other “real” TV programming.
And you’ve seen this playbook work before: Ask Rupert Murdoch, who created an entire broadcast network on the back of a big-money NFL deal.
By the way, this is the only way you can get your hands on the NFL for a long time. Its other TV deals are all locked up for years, and I’m not sure the league will ever give you the ability to buy its core broadcast packages. They want those games as widely distributed as possible, which means they’re going to be very wary of giving it to someone who requires a box or a dongle or even a broadband connection to get them.
But Sunday Ticket isn’t core for the NFL, it’s supplemental. And my sense is that the league would let one of you guys have it, at a price.
Or maybe not: I ran this theory by Craig Moffett, the level-headed telco/TV analyst, and he wasn’t excited about it. He figures the league wants to keep Sunday Ticket as a niche offering, because individual teams want to lock down their local audiences.
And if lots of people in, say, Detroit had the ability to watch every game in the league, every week, instead of being stuck with a Lions-heavy diet, it could be hard to keep them on the farm.
At the very least, though, I’m pretty sure the NFL would take your bid seriously. They’re certainly not going to discourage a bidding war.
So why not give it a shot? Again, this isn’t like Hulu, where you’re buying constrained rights to show something that’s already been on TV. You’re buying the rights to show the most popular shows on TV, when they’re on TV.
That’s got to be more interesting than making a better cable set-top box, right? It’s certainly more fun for me to write about. So thanks in advance for taking this under consideration.
* For perspective: 4 years at $1.5 billion is $6 billion. Which is less than Microsoft spent on aQuantive in 2007, and when it wrote off all of that deal last year, no one said boo. More perspective: It’s half a Motorola. More perspective: It’s 4 percent of Apple’s cash hoard.
** Maybe, for good measure, you invest in the TV antenna business too, and offer a bundle. If you really want to take a flier, maybe you snap up Aereo, too.
Thanks to Bloomberg’s Alex Sherman and Ed Lee, who have a new media kibbitzing podcast that provided the impetus for this exercise. You should be able to hear all of us talking about this stuff later today.