In a telling sign of the NFL's extraordinary value to cable providers, new reports indicate that AT&T's bid to buy DirecTV may hinge on whether the satellite provider can renew its NFL Sunday Ticket football package.
In AT&T's Form 8-K filing with the SEC, the companies write, "the parties also have agreed that in the unlikely event that the Company's agreement for the 'NFL Sunday Ticket' service is not renewed on substantially the terms discussed between the parties, AT&T may elect not to consummate the merger."
DirecTV's exclusive deal with the NFL, which is estimated to be worth about $1 billion annually, is thought to be the crown jewel of the nation's biggest satellite television operator. About 2 million people receive the service, which can cost subscribers up to $300 a year.
DirecTV's deal with the NFL ends after the 2014 football season, and the exclusive negotiating window between the two parties has closed, but according to the Wall Street Journal the two sides are continuing discussions and there isn't another legitimate contender for Sunday Ticket.
DirecTV CEO Mike White said this week on a conference call that he and AT&T Chief Executive Randall Stephenson had spoken with NFL commissioner Roger Goodell as well as New England Patriots owner Robert Kraft, who chairs the NFL's broadcast committee, and the discussions with the league are "positive and constructive."
In the case that a DirecTV-Sunday Ticket renewal falls through, AT&T would not be able to claim damages so long as DirecTV put forth its best efforts to get the deal done.
AT&T has said it expects the deal to take a year to close, and experts are forecasting the DirecTV-NFL negotiations to be done by the end of the 2014 calendar year.
But just the fact that such language explicitly pertaining to NFL Sunday Ticket was in the deal's preliminary paperwork is another example of how much clout the league holds in business these days.