NFL Defies Logic on TV

Hmm. Much has been made over the last 24 hours about DirecTV telling "NFL Sunday Ticket" subscribers it won't charge them for missed games due to the NFL labor dispute.

Uh, is that a story? Only the reverse would seem to be the case: the satellite operator implausibly asking customers to pay if there is no play.

But implausible is frequently the operative word when it comes to the NFL and TV, so yes there is - sadly - some news there.

DirecTV is following logic with its position. The NFL isn't with its pay-anyway approach.

Games lost, season canceled? No matter, DirecTV still has to pay the league rights fees as part of its "Sunday Ticket" deal. So, do networks CBS, Fox, NBC and ESPN under their agreements.

Yes, there are provisions for the parties to get money back, though based on a judge's recent opinion, the NFL still could keep some of that advance.

DirecTV's new deal that goes into effect this fall has it paying the league a reported $1 billion a year, up from a previous $700 million.



The four networks also pay the league handsomely. Yet, executives there tiptoe around the issue of whether that brings a profit. Maybe they don't want to alienate the image-conscious, undefeated-all-around NFL.

So it was somewhat startling this week when DirecTV CEO Michael White waded into the territory that carries the veneer of the illogic.

"It may surprise you, but we actually lose money on 'NFL Sunday Ticket,' particularly with the new contract, so it's a bit of a loss leader," he said at an investor event.

What's the damage? Outside the DirecTV C-suite and finance office, it's really impossible to know. But to start with, 2 million customers take "Sunday Ticket," which at $335 this year, would add up to $670 million in revenue.

After $1 billion in rights fees, there's a $330 million shortfall DirecTV would have to make up, which it tries to do by charging for on-the-go "Sunday Tickett" access, some advertising and fees from bars and restaurants.

Of course, for DirecTV, with an annual domestic operating profit of more than $3 billion, even a loss of a couple hundred million bucks would be de minimis. On one level, so much of DirecTV's brand is linked to the cachet of "Sunday Ticket," so it surely helps attract loads of subscribers who don't want it -- and upsell customers who take it -- which helps it probably more than pay for itself.

For the networks, there's a similar loss-leader dynamic. Which means in at least one way, the exceedingly popular NFL is a loser.

1 comment about "NFL Defies Logic on TV".
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  1. Casey Quinlan from Mighty Casey Media LLC, June 3, 2011 at 5:02 p.m.

    Not surprised to hear this. Sad, not surprised. The league is a Dyson vacuum cleaner when it comes to cash in. Outbound cash, not so much. That the lockout is cast as a labor dispute is laughable, since there's so much cash on both sides of the table - although the young, just-drafted guys are now in the just-shafted group, again by both sides of the table.

    Glad at least DirecTV is showing some sense of customer value. Wish the NFL - league and players - would show the same. It will be very interesting to see what kind of legal action comes out of the first invoice broadcasters get for a season that doesn't kick off ...

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