Football fans and cord-cutters rejoice, because Verizon Communications (VZ 1.17%) just kicked off the week with some great news. On Monday, the telecom giant announced a new five-year distribution agreement with the NFL, giving it the rights to stream all in-market and national games to virtually anyone with an internet connection through the 2022-23 season -- including mobile devices on any wireless network.
You read that right. In contrast to its previous live-streaming arrangement, which was exclusive to Verizon subscribers, Big Red's new deal applies to NFL viewers regardless of whether they're part of the Verizon network.
IMAGE SOURCE: GETTY IMAGES.
What it covers (and what it doesn't)
It seems likely that the terms of this agreement were heavily influenced by Yahoo, which Verizon acquired for $4.48 billion this past June then subsequently merged with its existing AOL business into a new media and tech brands subsidiary dubbed "Oath."
This also means Verizon will lose its status as the country's exclusive mobile carrier for NFL games. But it's taking full advantage of its new reach. Through the new NFL partnership, Verizon will be able to live-stream all national preseason, regular-season, and playoff games, as well as the Super Bowl nationwide on its entire portfolio of digital and mobile media properties. That starts with the NFL playoffs next month on Yahoo, Yahoo Sports, and go90, as well as the NFL mobile app. According to Verizon, this means a prospective audience of over 200 million monthly unique mobile digital viewers in the United States.
In addition, Verizon will work with individual NFL teams on "Smart Stadium" technology to improve stadium operations. It will also provide mobile access to NFL highlights, coverage of the league throughout the year, and "a robust set of jointly developed original content."
It does not, however, include Sunday afternoon out-of-market games, the rights to which are owned by AT&T's DirecTV as part of its NFL Sunday Ticket package. Incidentally, the duration of that agreement also lasts through the 2022-23 season.
"We're making a commitment to fans for Verizon's family of media properties to become the mobile destination for live sports," stated Verizon chairman and CEO Lowell McAdam. "The NFL is a great partner for us and we are excited to take its premier content across a massive mobile scale so viewers can enjoy live football and other original NFL content where and how they want it."
The staggering price tag
To be clear, financial terms of the deal weren't disclosed. But according to anonymous sources speaking with Reuters, Verizon will pay roughly $2.25 billion to the NFL over the next five years for its new broad-reaching rights -- a princely ransom that more than doubles the estimated $1 billion price of its previous four-year deal.
At the same time, that's nothing considering Verizon generated net income of $3.7 billion last quarter alone. And keeping in mind that Oath generated revenue of roughly $2 billion in Verizon's most recent quarter, as well as the fact that Yahoo turned profitable just prior to joining Verizon, the company will also work to recoup its cost through incremental advertising.
"We believe that partnerships like this are a win for fans," elaborated McAdam, "but also for partners and advertisers looking for a mobile-first experience."
In the end, one thing remains clear: This is an unmistakable bet by Verizon on the central role of mobile streaming as the future of sports viewership. And I think investors and football fans alike should be elated as Verizon paves the way to that end.
