[opendtv] How Google or Apple Could Make Web TV a Reality: Spend Billions on the NFL

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Fri, 19 Jul 2013 09:58:50 -0400


Peter Kafka
How Google or Apple Could Make Web TV a Reality: Spend Billions on the NFL

JULY 19, 2013 AT 3:00 AM PT

Dear Tim, Larry, Steve and Jeff,

Sorry to bother you during earnings season, but I wanted to lob in an idea from 
the cheap seats.
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.
Again, for good reason. The TV Industrial Complex is really hard to displace, 
even for guys like you, with your technical chops, consumer connections and 
billions of dollars to throw around.

Which means that right now you’re either re-selling TV’s leftovers or floating 
proposals that would end up replicating the existing system.

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 

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, 
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