Yahoo Finance media reporter Allie Canal breaks down YouTube TV’s latest streaming deal to broadcast the NFL Sunday Ticket, package pricing, and how broadcasting may affect local businesses.
Video Transcript
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JARED BLIKRE: Welcome back. YouTube TV won the exclusive rights to stream the NFL’s Sunday Ticket. The Google subsidiary reportedly paid $1,000,000,000 more than the previous rights holder DirecTV, putting the price tag around $2.5 billion. Here with more on this major deal is Yahoo Finance’s media reporter Alexandra Canal. Allie, what do we know about this deal
ALLIE CANAL: Jared, a reported $2.5 billion. I mean, that’s a really high number to even wrap your brain around. But we know that sports is a highly sought-after asset in the streaming wars. And for a company like Alphabet $2.5 billion really is just a drop in the bucket, which is why we didn’t see too much of a stock reaction on the heels of this news.
But for those unfamiliar with NFL’s Sunday Ticket, it makes out-of-market games available to fans. So for example, I run into this all the time living in New York City. I am an Eagles fan. I am also a YouTube TV subscriber. I pay that $64.99 a month fee. But if the Giants and the Jets are playing at the same time as the Eagles, I cannot watch that game. So for me, since I’m already a YouTube TV subscriber, I can for a price purchase NFL’s Sunday Ticket as an add on.
Now, if you are not a YouTube TV subscriber, you can purchase it a la carte. We do not know what the price point will be at this point, but it’s safe to say that it’s going to be pretty high, especially if YouTube wants this to be a profitable offering. It’s worth noting that DirecTV, which as you mentioned was the previous rights holder, did not make money on this offering. So you have to wonder if the goal here is for YouTube to simply add more subscribers. YouTube TV had more than 5 million paying users and trial users as of July, so I do think there’s more room to run. And I do think they will add subs. And if you have more subs, you don’t need to rely as heavily on those ad dollars, which we know has slowed down amid the economic environment.
But again, the big question is, what’s the profit potential, especially considering that high price tag?
– Yeah, I’m also curious Allie, about what happens with bars and restaurants, who’s able to secure that deal? The NFL still thinks there’s another $200 million out there. How will greater profitability concerns across the entire media sector impact these types of deals?
ALLIE CANAL: And that’s a big question. Because a lot of these media and streaming companies were simply priced out from even attempting to acquire this package. Apple, they were negotiations, dropped out earlier this week because reportedly there were too many restrictions for the price. Disney, same thing. Just couldn’t afford it. So it’s really these big tech companies that have the money to power these types of deals. And especially considering we’re in this period where investors are punishing media companies that can’t turn a profit, this puts the pressure on.
And if you think about cable operators, too, Fox, CBS, when those sports contracts eventually expire, will they be able to outbid big tech? And what could that mean for the future of cable? What could that mean for the future of the streaming wars? So all these companies will be watching very closely to see how this ultimately plays out for YouTube TV since sports, no matter how pricey or expensive it may be, is the new shiny object in streaming.
– Yeah, YouTube just became the new cable and cable’s starting that slow bleed out, it would appear. Sorry for the graphic imagery there. Allie Canal, good to see you. Thanks so much.
