Will Amazon Go Deep for NFL?

Terry McLaurin (17) of the Washington Football Team during a regular season game on Oct. 4, 2020
(Image credit: Joe Faraoni / ESPN Images)

Liberty Media CEO Greg Maffei was the latest media chief to speculate on Amazon’s reported increased interest in sports rights, telling an industry audience earlier this week that he expects streaming video companies to get more involved in sports, which should drive rights fees skyward.

Speaking at the virtual Deutsche Bank Media, Internet and Telecom conference on Monday, Maffei said the time is ripe for big tech to boost its involvement in streaming sports.

"Amazon is certainly looking pretty actively, it looks like, at the NFL. You’ve seen a lot of interest from various players,” Maffei said. “Have we seen the execution yet? No. Amazon has moved from a bit player in the NFL to being a serious player and I suspect they're only going to get more serious over time and they won't be the only ones."

Amazon first dipped its toes in sports programming in 2017, agreeing to pay about $50 million for 10 Thursday Night Football games broadcast by NBC and CBS. It stepped up that involvement in 2020, renewing its TNF for three years and opening up speculation that it could expand its sports involvement, to possibly include the entire TNF slate. Fox CEO Lachlan Murdoch has hinted that the programmer may concentrate on its NFL Sunday package and give up rights to TNF. Amazon had been considered to be a possible bidder for the NFL’s out-of-market Sunday Ticket package, a notion that has gained more steam after AT&T agreed to spin off its TV distribution unit -- including DirecTV, U-verse and AT&T TV Now -- and selling a 30% interest in the new unit to TPG Capital for about $8 billion. As part of that deal, AT&T said Sunday Ticket, to which it holds the rights through the 2022 season, would move to the new company. 

Sunday Ticket negotiations are expected to wait until next year, as the league and potential suitors continue to circle around other rights. According to Sports Business Journal, Disney’s ESPN hammered out a deal to renew Monday Night Football and its ABC broadcast network will return to the Super Bowl rotation for the first time since 2006. 

On March 10, Disney said ESPN had reached a seven-year deal with the National Hockey League to air games on the cable channel as well as its ABC network and Hulu streaming service. 

But Amazon finally stepping up to the sports plate could have a huge effect on the way fans consume sports content.

"Amazon Prime taking over Thursday Night Football is a watershed moment in TV history that will undoubtedly accelerate the demise of linear TV and the multichannel bundle,” LightShed Partners partner and media and technology analyst Rich Greenfield wrote in a recent blog posting. 

In a research note, Barclays analyst Kannan Venkateshwar cited published reports that speculate Amazon would pay about $1 billion annually for TNF rights, above the $780 million he estimated Fox is paying in the last year of its five-year deal.

Thursday Night Football ratings have been significantly lower than other NFL packages, Venkateshwar wrote. According to the analyst, Amazon streamed the 11 games Fox carried in the 2020 NFL regular season and one Saturday game. The Saturday game generated about one-third of the viewership of an average nationally televised NFL game, and streaming TNF added between 200,000 and 500,000 viewers, according to the Barclays analayst. However, he noted the new deal may be for more games, driving down the cost per contest.  

And ratings may not be the ultimate game for Amazon when it comes to sports or anything else involved with Amazon Prime. 

Back in December, Amazon’s VP of global sports video Marie Donoghue said the online retailer’s interest in sports is tied specifically to what benefit it would have for the Amazon Prime service.

“We are opportunistic,” Donoghue said at the SportsPro OTT Summit in December. “I think sometimes that confuses people, that we do look at everything, but everything has started with the customer and we only do it if it provides value to the customer and particularly their Prime membership.” 

Later in that interview, Donoghue, who spent about 20 years at ESPN expanding its programming offerings before joining Amazon in 2018, stressed that Amazon isn’t a 24-hour sports service, but an entertainment service, and its inherent nature is vastly different from the other types of companies that normally bid on sports rights. 

“We literally start with the customer and work backwards,” she said

Amazon Prime offers free shipping to customers and has about 150 million people worldwide paying about $119 per year for the privilege. So while it would be nice if sports on Amazon Prime Video drew in more subscribers, the value of that add-on to the service is not in drawing in more customers who watch games and leave. The purpose of the video offering, Amazon chairman and CEO Jeff Bezos said back in 2016, ultimately lies in how many consumer products those viewers buy. 

“From a business POV for us, we get to monetize that content in an unusual way," Bezos said at the ReCode Code Conference in 2016. "When we win a Golden Globe, it helps us sell more shoes in a very direct way." 

The entrance of big video streamers into sports rights negotiations has been expected for years, but so far their involvement has been minimal. Any involvement from those companies -- Facebook and Google have been cited as potential major rights bidders -- would bode well for Liberty, which owns Major League Baseball’s Atlanta Braves, and the Formula One racing circuit. At the same time, the traditional cable bundle is showing signs of unraveling -- MVPDs lost about 7 million customers in 2020, according to reports -- and regional sports networks have been under pressure because of their high affiliate fees. 

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"The most important thing that drives sports rights is competition. To the degree we see new large digital distributors and the like enter the markets, that's a positive," Maffei said. “To the degree we have seen tradeoffs between free-to- air and pay and then a new version of pay, digital, I think having new players, new entrants is probably the most positive effect we have. I do see that likely to happen for some of the sporting events in the countries we have.”

Maffei also said that for smaller sports, breaking into the standalone streaming business can be tricky. Liberty’s own Formula One launched F1 TV in 2018, and earlier this week said it would revamp the streaming service with new features allowing fans to more easily find archived content and adding Brazil, Slovakia and the Czech Republic to the more than 82 countries where the service is available. 

At the Deutsche Bank conference, Maffei said that in the future he sees sports rights holders, especially smaller ones, offering a hybrid of subscription, broadcast and pay TV content. 

“We’ve learned that that can be an unbelievably  powerful fan engagement tool,” Maffei said of F1 TV. “But it’s hard at the amount of content we have -- 23 races and even shoulder content -- to build enough content to probably build a compelling service for a broad, board group of people. To be a fan engagement tool, great, to be something that is amazing for a really dedicated hardcore fan group, perhaps. But to be something which substitutes or overruns our traditional partners or the large pay partners or the large digital partners, I think that is going to be harder to see. I think you’re going to see a lot of sports find difficulty in building -- and we don’t have enough content --  a broad enough content interest on an ongoing basis to build a subscription product that really replaces what they have. Look at what happened to WWE pulling back and going to Peacock. And they have a lot more content than we do.”

Mike Farrell

Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.