The NFL Could Decide the AT&T-DirecTV Merger

The nearly $50 billion deal will depend on whether DirecTV is able to secure a renewal of its popular “NFL Sunday Ticket” service.

NFL fans could miss the action if their teams fail to sell out playoff games.
National Journal
Dustin Volz
May 19, 2014, 5:27 a.m.

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.

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