Big Tech makes a big play for live sports

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 (NFL), Major League Baseball, Formula One racing and college conferences.

They are competing to replace DirecTV for the rights to NFL Sunday Ticket, a package the league wants to sell for more than US$2.5 billion (S$3.5 billion) annually, about US$1 billion more than it currently costs, according to five people familiar with the process.

Eager not to miss out, Google has 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 firms 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 programmes on television. "It is hard when you are competing with entities that aren't playing by the same financial rules," said Mr Bob Iger, former chief executive and chairman of The Walt Disney Company, which controls ESPN, referring to tech companies' bankroll.

The NFL Sunday Ticket package - which shows out-of-market Sunday NFL games that are not being shown on local television - is available because DirecTV chose not to bid. It has been losing as much as US$500 million annually on the package, though it has also benefited from a reliable base of about two million subscribers.

Apple is considered the front runner. But a final deal has been delayed by talks over a concurrent sale of NFL media assets, including the NFL Network, RedZone channel and NFL+, a new subscription service that provides access to live games on mobile devices.

Apple has made winning the package a priority. CEO Tim Cook has met league officials and influential team owners like businessman Jerry Jones, who owns the Dallas Cowboys, and the Kraft family, which owns 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, remain in the hunt.

Mr Brian Rolapp, NFL's chief media and business officer, said the league expects to finalise a deal in the coming months.

Apple and Amazon are trying to position themselves for a future without cable.

Since 2015, traditional pay TV has lost one-quarter of its subscribers - about 25 million homes - as people traded cable packages for apps like Netflix and Hulu, according to MoffettNathanson, a 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 US$24.2 billion for rights in 2024, according to data from MoffettNathanson, nearly double what they spent a decade earlier.

The fragmenting of a decades-old distribution model has created an opportunity for Apple and Amazon. They 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 Starz and HBO Max, which pay Apple and Amazon 15 per cent or more of each subscription sold.

The National Basketball Association will be the first major test of the new competitive landscape. Its agreements with ESPN and Turner run through the 2024-2025 season.

Most sports and media executives predict that the league will stick with traditional broadcasters for most of its games, while carving out some small portion of rights for a tech company.

NYTIMES