Sirius XM Holds Onto the Football

The football will keep flying after this season at Sirius XM Radio (Nasdaq: SIRI  ) .

The satellite radio provider is extending its deal with the NFL for another five seasons, providing play-by-play coverage on Sirius for all of the league's games through the Super Bowl in February 2016.

The financial terms of the deal weren't disclosed, and that's a pity. One is left to wonder who had the greater leverage in the negotiations. On the one hand, Sirius reaches a much larger audience now than it did when the original deal began in 2004. At the time, Sirius paid the league $188 million in cash and $32 million in stock for seven years.

On the other hand, it's not as if Sirius has to pay a premium to be the "exclusive" satellite radio provider: Sirius XM now watches over the only two satrad networks.

Streaming rights have been added to the deal. The NFL is now available for Sirius subscribers -- or XM accounts that pay a premium for the "Best Of" package -- with online access. It's not clear if this also includes streaming through the official smartphone apps for Apple, Research In Motion, and Google's Android. After all, Howard Stern's show is available as a stream, but not through the smartphone apps.

I'll admit it: I was a skeptic when Sirius signed the original deal. Play-by-play exclusivity may be huge for DirecTV's (NYSE: DTV  ) Sunday Ticket, but how many people are spending three hours on the road on a Sunday? Satellite radio remains largely an entertainment appliance for commuters, making XM's deal with baseball -- where weekday games abound -- the more logical league tie-in. Terrestrial radio also covers the hometown favorites, though one can argue that there are plenty of displaced fans living far from their favorite teams.

The original math was tough to stomach, because Sirius was shelling out compensation of more than $31 million to the NFL for its 500,000 subscribers. These days, Sirius accounts for nearly half of Sirius XM's 20 million subscribers, so the new terms are likely far kinder on a per-subscriber basis.

In the end, it may be more about premium prestige than listener ratings for any particular game. After all, this is one more thing that some freeloaders can't hear on terrestrial radio. If Sirius XM is entertaining a rate hike when its FCC-mandated free time period ends next year, it needs to make sure that it arms itself with as much premium programming as possible.

It's how you win the game.

How big is the NFL for Sirius listeners? Share your thoughts in the comments box below.

Google is a Motley Fool Inside Value recommendation and a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor pick. The Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


Read/Post Comments (9) | Recommend This Article (6)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 03, 2010, at 2:12 PM, 702nitro wrote:

    As always, this is great news for Sirius!

    The thing I don't like is the 100 different packages to choose from. Why can't they just combine all Sirius and XM for $12.95 and make it easier for potential customers. I'll be honest here, going over the packages from the site makes my eyes cross. You almost have to spend a couple minutes studying to decide what you need.

    They could instead just charge a flat $9.95/month for all Sirius and XM music, and would allow the user to access it from each of the following (car,mobile,computer,home sirius radio) without having to charge additional for it. Then charge another $4.95 for premium channels or something.

    The way it stands now is like shopping for insurance.

    Also a "Preview" should be available for channels that customers don't subscribe to. That way they can tune in into a channel and preview it for about '2-3 minutes a day' so they can get a feel if it is something they like and would want to subscribe to.

  • Report this Comment On December 03, 2010, at 2:33 PM, Austin77478 wrote:

    Fair & concise article! Mel has been in the media game for a long time. He is going to deliver for investors.

  • Report this Comment On December 03, 2010, at 2:59 PM, pete163 wrote:

    AND THE HIT"S KEEP COMING, GO MEL

  • Report this Comment On December 03, 2010, at 4:47 PM, JamesRobertDobbs wrote:

    re 702nitro: "Why can't they just combine all Sirius and XM for $12.95 and make it easier for potential customers."

    I like a La Carte option. I pay $7/month for 50 channels; all my favorites, a few that I don't listen to all that often. Why pay almost twice as much for channels I never listen to?

  • Report this Comment On December 03, 2010, at 5:16 PM, multi007 wrote:

    @ JamesRobertDobbs. I understand your philosophy. Many ask the same question as it relates to cable/satelite tv. Yet, things, "they are a changing"... As it stands now, you can cancel cable/satelite tv and watch/purchase shows on a per show basis via itunes, hulu and others. It does get pricey if you have alot of shows to watch, but for someone with a small number of shows to watch - it may be a cheaper option.

    As for satelite radio, the company still needs to build a sub base stronger than it is and reduce overhead before it can even consider a per channel charge.

  • Report this Comment On December 03, 2010, at 6:30 PM, 702nitro wrote:

    James I see your point. But Ala Carte doesn't even include online streaming access(at least thats what the site says). I mean common, again you should be able to listen from all outlets(car,computer,smartphone, home stereo) without paying a penny more. When you register a device don't you have to call Sirius support anyways!

    It's not like i'll be buying 10 SAT devices for my friends and put in under my account. Again, one subscriber = 1 car, 1 computer, 1 smartphone, 1 home.

    What happens when the trip is over, it means show, music, and game is over. Wouldn't it be nice to continue program through smartphone!!! Sirius needs to think about these kind of things because it just makes common sense. Why charge extra???? Who stands to benefit in the end? It is Sirius. By giving customers what they want and by giving value, the customers will stick with them to the end, not by finding creative ways to nickel and dime the customer.

    LONG SIRI

  • Report this Comment On December 04, 2010, at 8:13 AM, Matt8265 wrote:

    Siri will drop 20% whenever Stern leaves. If it's 2010, 2011. Hold at your own risk.

  • Report this Comment On December 04, 2010, at 3:08 PM, postal58 wrote:

    When Stern leaves there will be less than 10 million. BA BA BOOEY

  • Report this Comment On December 07, 2010, at 11:42 AM, topbeancounter wrote:

    Just another reason I took advantage nearly three years ago of making a single $400 payment to never pay another bill from Sirius. At the time, I sorta figured it was a roll of the dice. I no longer think so. Since I can look forward to adding streaming NFL broadcasts when my favorite team is either blacked out or I'm on the road, I am one very happy camper. A big thank you Mel. You are the man when it comes to radio in any form.

    Now get Stern signed up for another five years...

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