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How the NFL and Silicon Valley are primed to blitz cable TV

Mark Sullivan | Aug. 27, 2013
Verizon already has a football deal. What happens if Google and Apple pile on, too?

Apple TV troubles
Reportedly Apple has also been talking with various content providers this summer, and sports programmers are undoubtedly among them. Apple originally tried to acquire premium content streams for its Apple TV product through cable and satellite services. But having made little progress with that strategy, Apple is now talking directly to content providers, according to a report on Quartz.

According to that report, Apple has been speaking with Disney's ESPN, Time Warner's HBO, and Viacom (which owns MTV Networks, Nickelodeon, and Comedy Central). ESPN execs confirmed that they've been talking to various Internet video providers, but didn't name names.

The biggest problem with the Apple TV product (and potentially with the rumored Apple television, as well) is that you can't use it stream live feeds from programmers like ESPN and MTV. If Apple ends up signing agreements with the content providers, the situation would change, and the content would be delivered in much the same way it is on cable or satellite service today.

But the content owners aren't likely to give the Internet companies a better deal on the content than what they give to the cable and satellite guys. They will also require Apple to buy everything they offer, not just single channels. "We're not going to offer one-offs," ESPN president John Skipper said, according to a Bloomberg report. Apple, for example, would have to buy a bundle of ESPN channels, including ESPN Classic, ESPN2, ESPN News, and more.

So we may be entering a world where video services from Apple, Google, Intel, and Sony provide "virtual cable" services that cost just as much as (or more than) the Comcast and DirectTV services we buy today. The content owners—sports content owners, in particular—hold the bargaining power to make it so.

Sports TV has the juice
For the Comcasts and DirecTVs of the world, dedicated sports channels represent four of the top ten subscriber fee earners, with ESPN the leader by a large margin.

Given that kind of juice, sports programmers like the NFL are a force to be reckoned with in licensing negotiations. The Wall Street Journal reports that the NFL and other sports leagues took an average 40 percent fee increase in recent renewals of their four-year contracts with network and pay TV operators.

Their power and influence in the market enable sports programmers to play the field in choosing distribution partners,as the NFL's recent visit to California to meet with Google vividly demonstrates.

Lee Berke, a sports media consultant who's worked with Verizon Wireless on past sports deals, says the space is ripe for disruption. "You can look at it as [the sports programmers] offering a [TV] signal, and they can offer that signal to whatever hot new technology medium that comes down the road, whether that's Google Glass or a watch phone, or whatever," Berke told TechHive. "They keep on moving to screen after screen, and they are definitely trying to pick winners."

 

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