YouTube's NFL Deal Is a Score for Streaming, Sack for Cable

Google unit will pay $2 billion a year for the Sunday Ticket package of out-of-market games

Los Angeles Rams player tackling a Greenbay Packers player.

Patrick McDermott / Getty Images

The National Football League (NFL) will move its Sunday Ticket package of live games to YouTube from DirecTV, marking the latest exit for a cable industry already losing subscribers to streaming services.

The deal will apply only to out-of-market games, meaning viewers won't be able to see games taking place in their local area. YouTube, a unit of Alphabet-owned Google (GOOG), will pay the NFL about $2 billion annually under a seven-year contract after outbidding Amazon (AMZN) and Walt Disney (DIS) subsidiary ESPN.

Key Takeaways

  • Google subsidiary YouTube landed a seven-year contract with the National Football League to stream out-of-market NFL games
  • The contract for the NFL Sunday Ticket package will pay the league about $2 billion annually, up from $1.5 billion a year under a previous deal with AT&T's DirecTV.
  • The shift dramatically expands Sunday Ticket's potential audience and poses a further threat to cable networks, which are losing subscribers to streaming services.
  • YouTube and rival streaming platforms are paying up for premium content in pursuit of long-term growth amid a recent slowdown in advertising revenue.

"We have been focused on increased digital distribution of our games," said NFL Commissioner Roger Goodell. "This partnership is yet another example of us looking towards the future and building the next generation of NFL fans."

The television package costs $300 a year and $400 with premium features at DirecTV, hasn't been available previously in detached homes without the satellite dish service. DirecTV parent, AT&T (T), paid $1.5 billion annually under an eight-year deal expiring this year.

NFL Expanding Playbook

Last year, the NFL awarded a weekly national Thursday game to Amazon's Prime Video for a $1 billion annual fee in its first streaming foray. Including TV deals with ESPN, Comcast (CMCSA) unit NBC Universal, New Corp (NWSA, NWS) subsidiary Fox, and Paramount's (PARA) CBS, the league secured some $100 billion over 11 years.

NBC and CBS stream the games they televise on their own streaming services, Peacock and Paramount+ respectively. The NFL also streams games on the NFL+ app, though subscribers can only watch live regular season and playoff contests on phones and tablets.

At YouTube, Sunday Ticket and its live coverage of all games out-of-market games will be available as an add-on to the $65 a month YouTube TV service and as a standalone on YouTube Prime Channels. YouTube has declined to say how much it plans to charge for Sunday Ticket. "We're going on an increasingly attractive platform that is growing on a global basis,” Goodell told The Wall Street Journal. Alphabet is counting on growth in subscriptions to offset a recent advertising slowdown at YouTube.

Streaming's Threat to Cable

Added competition for sports rights from tech giants including Google, Amazon, and Apple (AAPL) has squeezed TV sports broadcasters, whose audience has been shrinking amid consumer defections from cable. Apple, which the New York Times said was involved in bidding on the Sunday Ticket package before bowing out, streams Major League Baseball and Major League Soccer games on AppleTV.

The pressure of rising rights fees and diminished TV revenue is likely to force recently rehired Disney CEO Bob Iger to initiate spinoffs of ESPN and ABC in 2023, Well Fargo analysts said this week.

DirecTV lost $500 million a year on Sunday ticket, and major sports TV rights have also increasingly become loss leaders for the broadcast networks.

The deal with YouTube, which has more than 5 million YouTube TV subscribers, grants the NFL incentives based on subscriber growth and other performance metrics, according to the Times, which estimated the contract's annual value at $2.5 billion. YouTube's deal covers only residential Sunday Ticket subscribers, allowing the NFL to cut a separate deal, likely with DirectTV, to continue delivering the service to bars and restaurants.

Article Sources
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  1. National Football League. "NFL, Google Announce Agreement to Distribute NFL Sunday Ticket on YouTube TV, Primetime Channels."

  2. The Wall Street Journal. "YouTube Paying Roughly $2 Billion a Year for NFL Sunday Ticket."

  3. DirecTV. "Get Sunday Ticket."

  4. Fierce Video. "DirecTV and NFL Ink Sunday Ticket Deal: 8 Years at $1.5B per Year."

  5. CNBC. "NFL Finalizes New 11-year Media Rights Deal, Amazon Gets Exclusive Thursday Night Rights."

  6. The New York Times. "YouTube Reaches Deal for NFL Sunday Ticket."

  7. IBISWorld. "Number of Cable TV Subscriptions."

  8. Morningstar. "Disney Will Spin Off ESPN in 2023, Allowing It to Stream Directly to Sports Fans, Analysts Predict."

  9. Sportico. "Sports Broadcast Rights Pacts Becoming 'Loss Leaders' for Networks."

  10. CNBC. "NFL Sunday Ticket Goes to YouTube in $2 Billion Deal."

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