To the victor go the spoils, so it wasn't a surprise to see Sirius XM Radio (NASDAQ:SIRI) extend its deal with the NFL. The satellite radio provider will continue to carry every pro football game as well as the SiriusXM NFL Radio channel through 2022.
Terms of the deal weren't made public, but it's hard to fathom it being a lot more expensive -- at least on a per-subscriber basis -- than the last time that the two parties extended their pact in late 2010. Unlike television, where there are plenty of hungry networks bidding up NFL broadcasting right, Sirius XM is the only game in town when it comes to satellite radio.
The 2008 merger of Sirius and XM may not have created a monopoly when it comes to radio. Consumers have plenty of options, and those choices are growing in this age when streaming options are a quick app download away. However, when regulators allowed Sirius and XM to hook up it made this the only game in town in satellite radio. It may as well be a monopoly on premium live radio, too.
Sirius XM would seem to be the one that has all of the leverage. This isn't like the old days when Sirius and XM would bid against one another, divvying up NFL and MLB rights that way. If any content creator wants to be on premium radio it pretty much has to go through Sirius XM.
This doesn't mean that Sirius XM will be paying less overall. It had just topped 20 million subscribers when it announced the 2010 extension. It now has 28.4 million accounts. The NFL is going to want more for its product.
It's certainly still a nice catch for Sirius XM. The contract for Howard Stern is up in less than three months, and it remains to be seen if he will sign on for yet another extension. If Sirius XM loses Stern -- and fell short in securing the NFL -- that would have created a huge programming void. There are certainly plenty of reasons the NFL itself on satellite radio may not seem very valuable to its listeners.
- Most games are played on Sundays, when there aren't as many drivers on the road as there are during weekday work and school commutes.
- Football is a visual sport, unlike baseball that lends itself to the poetry of the spoken word. It's more compelling on TV than radio.
- Most football fans will gravitate to the local NFL team, and those broadcasts are typically available on free radio.
This is still a smart deal, and it may even be a necessary deal. Sirius XM is rolling. It's coming off of 18 straight quarters of positive earnings, according to data from S&P Capital IQ. However, losing existing content would rightfully diminish the perceived value of the platform. Sirius XM has programming flexibility that may be the envy of the pay TV industry, but it's also in a tenuous spot with so many free or nearly free alternatives. This deal is a great catch for both Sirius XM and the NFL.
Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.