LOS ANGELES — More than a decade after Apple disrupted the music industry and Amazon upended retail, the tech heavyweights have set their sights on a new arena ripe for change: live sports. Emboldened by their deep pockets and eager to boost viewership of their streaming-subscription services, Apple and Amazon have thrust themselves into negotiations for media rights held by the National Football League, Major League Baseball, Formula One racing and college conferences. They are competing to replace DirecTV for the rights to N.F.L. Sunday Ticket, a package the league wants to sell for more than $2.5 billion annually, about $1 billion more than it currently costs, according to five people familiar with the process. Eager not to miss out, Google has also offered a bid from YouTube for the rights beginning in 2023, two people familiar with the offer said. The tech companies’ interest is a thrill for sports leagues and a terror for media companies that fear competition from rivals that collect tens of billions of dollars from dominant positions in other businesses. Last year, sports accounted for 95 of the 100 most viewed programs on television. “It’s hard when you’re competing with entities that aren’t playing by the same financial rules,” said Bob, the former chief executive and chairman of the Walt Disney Company, which controls ESPN, referring to tech companies’ bankroll. The N.F.L. Sunday Ticket package — which shows out-of-market Sunday N.F.L. games that aren’t being shown on local television — is available because DirecTV chose not to bid. It has been losing as much as $500 million annually on the package, though it has also benefited from a reliable base of about 2 million subscribers. Apple is considered the front-runner, according to a dozen people in the sports, media and tech industries. But a final deal has been delayed by negotiations over a concurrent sale of N.F.L. media assets, including the NFL Network, and NFL+, a new subscription service that provides access to live games on mobile devices. Apple has made winning the package a priority. Tim Cook, Apple’s chief executive, has met with league officials and influential team owners like Jerry Jones, who owns the Dallas Cowboys, and the Kraft family, who own the New England Patriots, according to three people familiar with the process. Apple declined to comment. Still, Amazon, ESPN+ and YouTube, which explored a bid for the rights in 2014. Brian, the N.F.L.’s chief media and business officer, said in a statement that the league expects to finalize a deal in the coming months. Fans will still be able to access all the games on Sunday, regardless of who wins the rights, but they will probably pay a premium to add the service to their Apple, Amazon, ESPN+ or YouTube service. It is not yet clear if that premium would be more or less than the $294 that DirecTV charges for a year, they added. Apple and Amazon are trying to position themselves for a future without cable. Since 2015, traditional pay television has lost a quarter of its subscribers — about 25 million homes — as people traded cable packages for apps like Netflix and Hulu, an investment firm that tracks the industry. But the price of live sports rights is only projected to increase. The biggest media companies, including Disney, Comcast, Paramount and Fox, are expected to spend a combined $24.2 billion for rights in 2024, according to data, nearly double what they spent a decade earlier. The fragmenting of a decades-old distribution model has created an opportunity for Apple and Amazon. The companies want to expand deeper into media by selling subscriptions to Apple TV+ and Amazon Prime. Besides containing their own exclusive shows and sports, those services double as portals selling additional streaming offerings like Star and HBO Max, which pay Apple and Amazon 15 percent or more of each subscription sold. Amazon generates more than $3 billion annually from third-party subscription sales, according to estimates by the investment bank BMO Capital Markets. To make the business model work, Apple and Amazon must attract more viewers, and sports are the most powerful draw in media. The companies may be willing to lose money on Sunday Ticket to expose new customers to other parts of their business, the same calculation that DirecTV historically made.
You must be logged in to post a comment.