The exclusive negotiating window between the National Football League and DirecTV (NASDAQ:DTV) for the Sunday Ticket package of programming has expired. That means the two longtime partners could go their separate ways after the 2014 football season.
That may not be likely -- DirectTV pays $1 billion a year for the right to sell its customers a package of every out-of-market game -- but it's more likely than ever before due to changing technology. In the past the NFL had limited potential partners for the deal as only DirecTV and its rival Dish Network (NASDAQ:DTV) offered a national delivery partner. Now, however, one of the existing digital streaming companies like Netflix (NASDAQ:NFLX) or Hulu could be a potential partner or the NFL could follow WWE (NYSE:WWE) and create its own "over the top" streaming network.
Host Jason Hellmann and panelist Daniel Kline discussed the NFL's options focusing on whether the league still needed a partner on Business Take, the show that gives you the Foolish perspective on the most important business stories of the week.
"The WWE Network shows us that maybe the NFL does not need to share money with DirecTV," Kline said. "Yeah, right now they're getting a billion dollars and that's a nice sum of money, but if they were to offer this on their own maybe there's more money out there for them."
Currently DirectTV gets between $240 and $320 per year per subscriber and about 10% of its customer base pays for the package. The company also uses the service as a loss leader, giving it to new customers for a year for free in exchange for them signing up with the satellite provider for two years.
Since DirecTV is only selling the service to the limited pool of its own customer base, theoretically the NFL could reach many more people with a globally available streaming network. The question as to whether doing that makes sense is exactly how many potential customers there are and what it would cost to get them to sign up.
"You don't need a satellite dish anymore," Kline said.
"MLB does this," Hellmann added. "The viewership is there but you have to think about how this might impact the NFL's broadcast deals." Those deals run through 2022 and are worth around $27 billion.
Those deals don't preclude selling out-of-market games through a streaming network, but offering that service might be seen as a threatening move to its TV partners.
"The people who would buy this are fans who don't live in the market where their team plays," Kline said. "But when I lived in New York and had to go to bars to watch Patriots games, if I couldn't go to a bar I wasn't going to watch the local game anyway because my team was not on."
It's possible the NFL will avoid creating its own networks because even the perception of slighting its TV partners is not worth the risk. Would you pay for an NFL network that offered all out of market games? Watch the video then share your thoughts and comments with us below.
Daniel Kline has no position in any stocks mentioned. Jason Hellmann has no position in any stocks mentioned. The Motley Fool recommends DirecTV and Netflix. The Motley Fool owns shares of Netflix. 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. The Motley Fool has a disclosure policy.
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