The gargantuan merger of AT&T and DirecTV announced Sunday could hinge on next year’s football season, according to AT&T’s latest financial filings.
The telecom giant, which wants to acquire DirecTV for $48.5 billion, has carved out an exception that would allow it to back out of the merger if DirecTV is unable to renew its popular NFL Sunday Ticket package, which lets viewers watch professional games not broadcast in their area.
“The parties also have agreed that in the event that DirecTV’s agreement for the “NFL Sunday Ticket” service is not renewed substantially on the terms discussed between the parties, the Company may elect not to consummate the merger,” it wrote in financial documents reported Monday to the Securities and Exchange Commission.
AT&T additionally noted that it “will not have a damages claim arising out of such failure so long as DirecTV used its reasonable best efforts to obtain such renewal.”
DirecTV paid the NFL $4 billion in 2009 to extend until 2014 an exclusive contract for NFL Sunday Ticket, which allows customers to view professional football games played on Sunday afternoons that are unavailable on local affiliates. The service allows fans to watch games that are produced by Fox or CBS, regardless of where they live.
The condition presumably gives the NFL powerful leverage to demand an even higher fee from DirecTV.
On a press call Monday, DirecTV CEO Michael White said the satellite network is in an “active discussion” with the NFL about renewing NFL Sunday Ticket. White added he was “highly confident” a deal would get done before the end of the year.
If the merger is approved, AT&T would become the second-largest player in the pay-TV market after a combined Comcast-Time Warner Cable. The deal would likely help DirecTV compete by letting it offer bundles of broadband Internet and wireless services in addition to its TV packages.
AT&T is attempting to placate regulators by promising to abide by the Federal Communication Commission’s 2010 net-neutrality rules. The company is also promising to expand broadband services to 15 million Americans, especially in rural areas. But already some consumer groups are knocking the deal as anticompetitive.
The House Judiciary Committee said it will hold a hearing soon to review the merger deal.