DirecTV: Is NFL Sunday Ticket Worth the Roster Space?

Photo courtesy of ariadnerb, licensed via Flickr through Creative Commons.

Broadcasting National Football League games is not a cheap proposition. The NFL is big business; viewership is growing, and forty-six of the 50 most-watched television broadcasts of 2013 were NFL games. In fact, with revenues totaling $9 billion in 2012, the NFL is the most profitable sports league in the world.

With such brand cachet, it is possible for the league’s management to exact a hefty sum from DirecTV (NASDAQ:DTV) for exclusive licensing rights to all NFL Sunday afternoon games. Under the terms of the current agreement that runs through the end of the 2014 season, the satellite-television provider pays $1 billion per season. Those terms allow DirecTV to offer subscribers a package known as “Sunday Ticket,” a channel designed to give football fans access to out-of-market games via a live feed of Sunday afternoon games across the country. Around 2 million of the company’s 20 million United States subscribers pay around $250 for the basic package, and Sunday Ticket is a means for the company to fend off competitors, especially web-based rivals that are hungry to offer subscribers exclusive content. But still, the satellite-television provider is examining whether the programing is truly worth the cost.

“The Sunday Ticket package was a brilliant play for DirecTV, as it gave the displaced NFL fan an option to watch their team in the comfort of their own home and not be forced to go to the local sports bar,” Marc Bluestein, president of consulting firm Aquarius Sports & Entertainment, told the Los Angeles Times. The “association with NFL definitely delivered large brand awareness for DirecTV, especially in its early years,” he added DirecTV launched its satellite service in 1994, the first year that the sports package was created. But the company is beginning to question whether the value of the Sunday Ticket package has peaked.