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Google, NFL meeting reportedly includes Sunday Ticket discussions

Discussion in 'DIRECTV Programming' started by Athlon646464, Aug 21, 2013.

  1. JohnBoy

    JohnBoy New Member

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  2. jdskycaster

    jdskycaster Legend

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    Interesting article. As it stands is the current deal really a $400M loss leader for Direc? They cannot possibly be taking that big of a loss on the current deal while acting excited about inking another.
     
  3. Laxguy

    Laxguy Honi Soit Qui Mal Y Pense.

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    Where does that figure come from?
     
  4. jdskycaster

    jdskycaster Legend

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    In the article it says roughly 2M subscribers X $300 per is approx. $600M. The contract is estimated to be worth $1B. That leaves a shortfall of $400M. I know these are rough numbers but even if the contract was somewhat less and the subscribers are paying a bit more (who knows if the total number of paying subs is actually 2M) then the gap is still pretty big.

    Let's be generous and cut that number in half to a $200M shortfall. Still looks like a bad business deal on paper. I realize they use this for marketing purposes but does that marketing actually generate greater than $200M in profits? Maybe, maybe not. I would still think they would be looking to cut a better deal than that with the NFL. The survey is some indication that they are trying to better understand the profit and loss potential of a new deal.
     
  5. Beerstalker

    Beerstalker Hall Of Fame

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    My guess is that's only counting home subscribers. You're forgetting about bars and other businesses that pay way more than $300 per year, and are most likely not being counted in that 2 million customers number.
     
  6. joshjr

    joshjr Hall Of Fame

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    You just missed a major part of it. How many of the 2 million are sports bars? Isnt Sunday Ticket like $800 or more for them? I know its alot more and that is where your math is coming up WRONG!
     
  7. Laxguy

    Laxguy Honi Soit Qui Mal Y Pense.

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    Thanks, jd. Among the suspect numbers is 2 MM subs. Heck it could be 3 or 4 million! Those who know will not say.....
     
  8. jdskycaster

    jdskycaster Legend

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    Yea, just re-quoting the numbers from the article. I realize these are anecdotal and rough based on the spin Direc wants to put on them. :)
     
  9. jdskycaster

    jdskycaster Legend

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    How many of the 2 million are new subs getting it for free? I never said my math was exact here. How much is alot more? Hard to put that value into a calculator. I realize the numbers could be off and maybe Direc is making a killing offering this. IF they are in the black on the current deal then what they are divulging (wrt numbers) makes them look pretty silly in that it appears they made a really bad deal the first time.

    IF sports bars are tipping the scales then why not mention that in rough numbers? Are there hundreds of thousands of them? Tens of thousands of them, or just thousands of them? If one bar equals 2.5 subs, from a revenue perspective, then even 100,000 sports bars only means an additional 250K subs. That is part of the rounding error on the 2M number they elude to. This is why I was willing to cut the $400M loss pretty quickly to $200M. :)
     
  10. Gloria_Chavez

    Gloria_Chavez Godfather

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    During my strategy consulting days, one of our clients was a major tire company. We were asked to quantify the true costs associated with certain business units. So we interviewed managers/rank-and-file workers, and determined that their racing division (designed tires for sponsored cars) was costing it hundreds of millions a year.

    The Executive Committee thanked us for our work, and kept the division open, ascribing it marketing value.

    So it is with DTV and ST. And if Google bought the rights to ST, it would be prepared to lose at least 2x as much as DTV is losing, as it would have to pay at least 1.5B a year.
     
  11. jdskycaster

    jdskycaster Legend

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    Great points Gloria. I too believe it is going to cost them dearly to ink the new contract and gauging their subscribers willingness to pay more is a clear indicator of that.
     
  12. Beerstalker

    Beerstalker Hall Of Fame

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    The costs for bars/restaurants/businesses are much more. They tend to go by occupancy of the buildings as well. So a bar that holds 50 people might pay $1000, and a bar that holds 200 people has to pay $2500 etc. I don't know the exact numbers but I know it works like that and I'm pretty sure the prices are in the thousands not the hundreds. I think you can look it up on DirecTV's business site.

    Yeah here it is.
    http://www.directv.com/DTVAPP/content/business/bars_restaurants/sports

    Looks like my prices were a bit low. $1,445 for a bar that holds 50 people, $4,590 for a bar that holds 200. All the way up to $57,375 for a business that holds 5,000 people.
     
  13. renbutler

    renbutler Godfather

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    I'm getting ST for free -- technically. But DirecTV is still making over $1000 a year off of me solely because of Sunday Ticket. How? If they didn't have Sunday Ticket exclusively, I'd probably be with a different TV provider at this point, and they'd be making $0 off of me.

    And from what I gather, there are many other people just like me in this regard.
     
  14. Beerstalker

    Beerstalker Hall Of Fame

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    One thing I could see happen is maybe the TV rights and the streaming rights will end up getting separated. Maybe DirecTV will keep the exclusive TV rights, but Sunday Ticket Max streaming will go away. Instead Google (or someone else) will get the streaming rights and set it up however they want. More like how the NBA and MLB do it. DirecTV get's Extra Innings and League pass, but MLB.TV and NBA live are seperate and you have to subscribe to them on their own.
     
  15. JohnBoy

    JohnBoy New Member

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    I'am one of said people.
     
  16. joed32

    joed32 Hall Of Fame

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    There are a whole lot of people who will follow ST if it goes elsewhere.
     
  17. glrush

    glrush Cool Member/Supporter DBSTalk Gold Club

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  18. JoeTheDragon

    JoeTheDragon Hall Of Fame

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    but who has the covage that directv has? dish?? but they still have part time RSN HD so do they even have the room for this?
     
  19. joed32

    joed32 Hall Of Fame

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    Nobody. I'm just saying that if Directv loses ST they would lose a lot of subs with it including me. That's why I think it isn't going to happen.
     
  20. JosephB

    JosephB Icon

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    There's a lot to consider, and a lot in DirecTV's favor if they want to keep it

    1. DirecTV has invested heavily in and owns the NFLST infrastructure. They have control rooms and production facilities dedicated to NFLST. One would assume that if they lost exclusivity, or if they lost it entirely, they would not give that infrastructure up freely. Losing exclusivity but maintaining distribution rights, one would figure DirecTV would want to be reimbursed to produce the feeds. There's a chance that the NFL would be forced to build that up, or, if someone else got exclusive rights they'd have to build it up.

    2. I don't see the NFL letting it go online-only. Even though that is where things may end up eventually, we're not there yet. 2 million people will not sign up to watch on their computers, or Rokus, or anything else. It would kill the sports bar market. Even if they add an online component like Google or Apple, they will keep it on a MVPD of some kind, and one of the two satellite providers makes the most sense. Moving to cable means that it's not universally available. Not all cable companies will pick it up. Moving to cable would have to mean negotiating and coming to agreement with the big players all at once (Comcast, Charter, Time Warner, etc). A lot of systems may not have room for that much new HD. Keeping it on satellite keeps a universally available product and universally consistent experience.

    The other problem someone like Google has is that, given all of that above, DirecTV will not pay what they're paying if they lose exclusivity or lose the digital component to someone like Google, and the NFL will not want to make less money on it this year than last. If Google is willing to over-pay for the digital rights, they can probably grab that. DirecTV would come out ahead because it'd no longer be a loss leader, and Google isn't going to siphon off enough subs for it to matter.
     

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