Is Google Ready to Buy Its Way Into TV With an NFL Deal?

larry page football

Here’s a fun combination to ponder: The world’s most powerful media company and America’s most popular sport.

That could happen if Google buys the rights to the NFL’s Sunday Ticket package, the all-you-can-eat subscription-TV service currently owned by DirecTV.

As I’ve noted before, the DirecTV deal ends at the end of the 2014 NFL season, which would mean it would make sense for the league to start talking to potential bidders now.

And it is. Today, according to sources, Google CEO Larry Page, along with YouTube content boss Robert Kyncl, met with a delegation from the NFL led by commissioner Roger Goodell. And the Sunday Ticket package was among the topics of discussion, according to people familiar with the meeting.

A Google rep declined to comment, and I’m still waiting to hear back from an NFL rep.

An informal chat is a very long way from a deal, so there’s no need to invest too much in the conversation quite yet. And I’m told that Goodell and other NFL executives are meeting with multiple Silicon Valley companies on this trip, which is one they make annually.

That said, Google plus the NFL is an intriguing concept. Google could certainly afford the rights, which currently cost DirecTV $1 billion a year.

And while YouTube is the world’s most popular video service, Google has been playing around the edges of TV without making a substantial dent. An NFL deal could certainly change that.

Meanwhile, the NFL seems willing to consider an “over the top” provider for the service, which it views as ancillary to the core TV packages it has sold to CBS, Fox, NBC and ESPN.

At the very least, it would be happy to have multiple bidders. Let’s see if the NFL gets them.

37 comments
coastalmerc
coastalmerc

I believe streaming tv is the future (as soon as all the programming agreements run out).  The advent of streaming tv with better quality each year can and will replace cable, satellite and even live broadcast because every home has or will have an internet source with wifi (or mifi) available.  Economy alone will force the shift in due time.  The NFL can't be blind to this fact.  There may be fringe areas that require satellite for a while longer but that will end in time.  No more deals with Directv please!!!!!!

kpkpkp
kpkpkp

I am willing to pay $10 for a single NFL game (of my choosing) through the Google Play store, to watch live and return to view at future times.  And, yes, I have ChromeCast and think it's awesome.

Jonathan Marcus
Jonathan Marcus

It should be illegal for the NFL to sign an exclusive deal with any one provider. Many people can't get DirecTV simply because their apartment is facing the wrong direction. And the whole system comes to crashing halt anytime it rains hard. What are you supposed to do when it starts raining in the middle of football Sunday? Going from HD feeds of every game on a flat screen without any buffering to anything less is a maddening drop-off. An exclusive license with Google would be an absolutely TERRIBLE user experience. The NFL package via the Playstation was a TERRIBLE user experience. Why won't the NFL sign multiple license agreements with various different providers? Surely the additional distribution would increase overall viewership and revenue.

ClaytonMill
ClaytonMill

It sounds like most of the people commenting on the list aren't aware that you can actually subscribe to a streaming version of the Sunday Ticket if you have a PS3!  I can't stand the DirecTV service either - but can't live without my Packer games - so gave in and called last year.  The DTV rep in my frustration let it slip that you could get the package if you claimed you were outside DTV service area.  So I ran out, bought a PS3, and then paid the ~$200 for the Sunday Ticket, and I stream it perfectly!  No added channels, packages, etc - just the Sunday ticket through my PS3 (and no multi-year commitment).  Google, Netflix or anyone else could do this perfectly as they already created the technology.

RichardWolpert
RichardWolpert

Certainly interesting times  One of the things that is stopping cord cutters is access to live sports.  between aereo and a nfl/google deal it will help along those considering cutting the cord


jdrch
jdrch

I imagine DirecTV's execs must be either in the bottle or on the toilet over this. There's really no way they can outbid Google or Apple, and Sunday Ticket is really the only thing keeping satellite service relevant to people who have cable service in their area.

That said, cable's NFL RedZone is a much less expensive, easier to use, and far more entertaining option than Sunday Ticket if you don't have to see every single minute of a particular game but just want to follow multiple teams at once.

BC2009
BC2009

The important part here is that the NFL is doing a tour of Silicon Valley companies (I'm sure Apple is in the mix).  They want all the companies to know that they are taking bids so they drive up the price of the exclusive deal (for DirectTV or for anybody like Apple or Google).


NFL is basically trying to drum up a higher price than $1B per year than they currently get from DirectTV.  Keep in mind that Apple makes about $55B in operating profit and $40B in net income after taxes annually.  Google makes about $13B operating profit and $11B in net income after taxes annually.  Meanwhile, DirecTV makes about $5B in operating profit and $3B in net income after taxes annually.


For Google to pay $1B per year would essentially amount to 8% of their operating profit.  For Apple to do it, it would amount to 2% of their operating profit. For DirecTV it amounts to 20% of their operating profit.  I'm sure the NFL is hoping for more than $1B per year or else they would not be shopping it around.

moldycheeze
moldycheeze

It really needs to be either a direct subscription from the NFL ala MLB.com or opened up to all cable,satellite providers etc. I really hate the monopoly Direct TV has had the last few years and it needs to be open to all. The good thing about Google getting it would be that anyone with a broadband connection would have access for a fee of couse. 

etw1960
etw1960

This would be huge in changing the dynamics of the way we watch TV in the future. Direct TV can't allow this to happen if they care about their future growth. This one sports monopoly (Sunday Ticket) has kept more customers loyal to them than any subscription package they have. How many customers have Direct TV just because of the Sunday Ticket, how many bars have it because of the Sunday Ticket? The sole reason I still have Direct TV is because of their sports packages and yes the Sunday Ticket. My wife can't stand paying our bill and has told me that we are dropping them as soon as they loose that package. I can't argue we have been paying over $100 a month since 2002 for the enjoyment of 18 weeks of NFL football.

NitinNarang
NitinNarang

Sports is the most critical piece missing in the OTT camp, something like this can change the landscape (cost and reach) for ever and unleash something good for all to follow.. 

TheSportsResume
TheSportsResume

I saw this coming, with the sports media rights deal Google Fiber made public a few weeks ago. The cash cow (NFL) continues to print money :)

RyanBruceBarclay
RyanBruceBarclay

I had this thought a long time ago, besides the sunday ticket deal how much sense does it make for Google to buy direct TV itself for the distribution network?

JackNFranFarrell
JackNFranFarrell

I'd pay $80 for a streaming 4xHDTV feed to my home entertainment center, provided it was the game of my choice and not bundled with stuff I didn't want.

Daniel Brindley
Daniel Brindley

This Strategy made Rupert Murdock a billionaire in the late 80's early 90's in the UK buying up exclusive content (Soccer, Boxing etc..) forcing people to subscribe - selling customers the hardware/ subscription package.  But unlike Google Rupert Murdock had a Satellite system and a full blown distribution system in the UK with no competitors.  Its 26 years later and unlike the late 80's the Internet is the new gateway to TV.  Google needs the right Price and the right Content and the NFL would be perfect! 


Fake_Carl_Icahn
Fake_Carl_Icahn

hell no; doing that would require gonads, and a real customer support staff.

WillWold
WillWold

in the long run I think it would have a negative effect on Google. people already complained about direct TVs subscription cost. I would hate to see that negative view pointed to google.

DonaldBrown
DonaldBrown

That deal would sell a TON of Chromecasts. Maybe even GoogleTVs - or maybe not ;)

FlyTr8R
FlyTr8R

Would be a brilliant idea.

mikellie75
mikellie75

@jdrch DirecTV can definitely outbid anyone. They admit that they overbid on the current contract and are losing money, but making the money back with new customers.

kvitterfilip
kvitterfilip

@jdrch Would guess the NFL cannot spare the exposure of cable/satellite TV. A more likely scenario would be to separate OTT and broadcast rights, selling broadcast to e.g. DirecTV or the likes and OTT to Google, Apple or similar. OTT and traditional broadcast viewers are still quite heterogenous groups, so it would allow the NFL to get the maximum licensing fee and exposure out of both demographics.

Alternatively, if they do sell to Google/Apple, I'd strongly bet there's going to be something in that deal forcing Google/Apple to re-sell all or significant parts of those rights to broadcasters for wide distribution, in parallel with their own OTT services.

BC2009
BC2009

@jdrch The hard part about this is the fact that streaming video over internet cable providers is going to seriously impact those providers on Sundays.  Google has some advantage in this area because they have begun to role out Google Fiber, but its not there yet in widespread availability (more like a beta test phase).


ttumpy
ttumpy

@BC2009 According to Martin Pyykkonen, an analyst from Wedge Partners, YouTube accounted for about 10% of Google's $14 billion in sales last quarter, with as much as 25% of YouTube revenues coming from mobile. Don't be surprised to see YouTube's growth begin to have a more meaningful effect on the company's overall revenue growth rates in the years to come.

BC2009
BC2009

Keep in mind.... the above figured neglect the fact that Apple or Google (or Netflix or Amazon) might charge for the NFL Sunday Ticket package to get it to pay for itself.


I imagine that if Apple got the deal, they would give 70% of all subscription proceeds to NFL and then pay a flat annual fee.  Google might do the same and have folks subscribe through the Play store.


Netflix and Amazon would are both setup on fixed cost monthly or annual models.  They would have to find some way to pass the costs of this package on to the customers.

kvitterfilip
kvitterfilip

@RyanBruceBarclay Google would have very little to gain from acquiring DirecTV. Synergies are minimal and a distribution network of satellite (one-way, broadcast) has basically no relevance to Google's OTT type products.

Fake_Carl_Icahn
Fake_Carl_Icahn

@DonaldBrown what a great and easy way to lose billions.  Hint: chromecast is for broadcasting your own content, not the NFL's.

coastalmerc
coastalmerc

@kvitterfilip @jdrch I agree.  There's room for more than one provider and better coverage for the NFL with more than one provider.  That is the short and simple of it.  They do the same thing with their long-standing deals with the traditional networks.  I hold no illusions, though.  It's still going to be expensive for the end user for the convenience of watching just what you want.

jdrch
jdrch

@BC2009 I'm not sure that's really an issue. If it were, Netflix and YouTube would be bringing ISPs to their knees already.

BC2009
BC2009

@ttumpy  Revenues and profits are two very different things.  I'm sure YouTube is one of the larger cost centers of Google as well considering the amount of storage required for YouTube.  NFL Sunday Ticket would be another cost for YouTube to incur.  So while I am sure that revenues will increase, there is a reason that YouTube is getting so many more video advertisements these days -- Google has to make money on it.

SJFee
SJFee

@Fake_Carl_Icahn I assume you're trolling...  Chromecast is DEFINITELY for broadcasting all youtube content, whether privately or publicly created. And, through the magic of Google Play, real Hollywood movies too. NFL Sunday Ticket is definitely within the realm of possibilities. 

munkyxtc
munkyxtc

@Fake_Carl_Icahn@DonaldBrown

Chromecast is not just for streaming your own content.  YouTube supports the chromecast; I could see Google adding Sunday Ticket channels (they have dabbled in live broadcasts) to YouTube which you could load up on your tablet hit the cast button and BAM, football on the big screen.

 The main purpose of ChromeCast IMO was to turn all TV's into smart tv's

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