DirecTV Keeps 'Ticket' But 'Red Zone' In Play3/28/2009 2:00 AM Eastern
DirecTV's $4 billion contract extension for “NFL Sunday Ticket” was the big business news out of the pro football league's annual meeting in Dana Point, Calif. last week.
But the deal — covering the 2011 to 2014 seasons at a 43% increase over the $700 million DirecTV is paying annually under its exclusive pact that expires in 2010 — also holds major ramifications for cable operators and other distributors.
Despite the rights increase that allows the satellite-TV leader to continue airing all of the league's Sunday-afternoon games, the National Football League will be able to offer a key feature of DirecTV's out-of-market pay-per-view package, the Red Zone Channel, to MSOs, telcos, satellite, wireless and Internet providers.
That channel — which provides live look-ins when a team's offense crosses its opponent's 20-yard line (the so-called red zone), as well as highlights and fantasy data — will become available no later than the 2012 season under terms of a deal announced on March 23.
NFL executive vice president of media Steve Bornstein intends to use the NFL Red Zone Channel as a bargaining chip to jump-start stalled negotiations for the league's in-house service. It counts only 35 million subscribers, as it has been locked at the scrimmage line with such distributors as Time Warner Cable, Cablevision Systems and Suddenlink Communications over pricing and positioning issues.
“The NFL Red Zone Channel will be very similar to” DirecTV's, Bornstein said in an interview. “It's an important element and will be part of a wider offering with NFL Network and NFL VOD.”
“This is a big development,” he told Multichannel News. “We have even more assets that we'll be able to offer to cable, telco and other satellite providers. We've already had some preliminary discussions with distributors.”
Bornstein said it was premature to discuss pricing for the ad hoc NFL Red Zone Channel, which would display on Sundays. “We just finished this deal last week,” he said. “That's part of what we will talk about with distributors.”
DirecTV executive vice president of content strategy and development Derek Chang concedes the top satellite provider gave up a bit of its edge with Red Zone Channel's wider berth. “There are risks with everything,” said Chang, who called the service “a compelling product, but not a full substitute for the Sunday Ticket. It's a matter of co-existence and we'll see how it works out for everybody.”
While some view the Red Zone Channel as a significant asset and an olive branch of sorts to distributors who have been shut out from the PPV package, others think the latest deal may not sit well with TV providers not offered a chance to get in on the full Sunday Ticket action.
“I'm not sure if operators aren't ticked off that they didn't get a chance to bid for full Sunday Ticket,” sports media analyst John Mansell said.
Cablevision CEO James Dolan has said in the past the operator would carry NFL Network only if it also received Sunday Ticket. The PPV package is also at the center of a legal dispute the network is in with Comcast, whose contract with NFL Network expires on April 30.
Although it loses Red Zone exclusivity, Chang's company can open up another Ticket revenue stream by offering the games on broadband to multi-unit dwellers who can't get DirecTV, or to those with poor exposure to its signal in the southern sky.
Under the current contract, broadband coverage of the games is limited to those who purchase Sunday Ticket and then pay an additional $99 for the broadband “Super Fan” package.
“Our first desire is to sign up more subscribers to DirecTV and add existing subscribers to the Sunday Ticket,” said Chang. “But this will give us access to people who live in apartment buildings and other multi-unit dwellings who can't receive DirecTV. We'll work with our partner, the NFL, to see how it can be beneficial for both of us.”
Bornstein said the broadband offering would also boost affiliates' high-speed Internet sales.
Bornstein may also have more games in his NFL Network playbook in a few years: the service could see its eight-game primetime schedule expand to a 17- or 18-game complement, kicking off in 2012.
“NFL Network's contract is co-terminus with CBS, Fox and NBC,” said Bornstein. “A wider slate of games is certainly under discussion, but nothing has been decided yet.”
NFL owners are expected to vote on increasing the 16-game regular season at their May meeting.