While DirecTV’s pricey NFL Sunday Ticket deal supplied a shiny trinket during AT&T’s $49 billion purchase of the satellite TV company in 2015, AT&T’s ability to integrate that program licensing asset into its next-generation products is proving to be tricky.
Launching today, AT&T’s new virtual pay-TV service, DirecTV Now, will have to black out NFL games for smartphone users on licensed networks including ESPN, FOX and NBC because Verizon has an exclusive mobile-content deal with the pro football juggernaut.
“NFL Football will be confusing at best,” MoffettNathanson analyst Craig Moffett said in a note to investors Tuesday. “It will be blacked out based on the device being used, not based on location, as it is Verizon, not AT&T, that owns the rights to the NFL on handsets." Furthermore, Sunday Ticket will be unavailable on the OTT offerings.
This has to be, in the parlance of DirecTV Now’s target market, a sick burn to AT&T, which is paying the NFL, on average, $1.5 billion a year over an eight-season span, based on an NFL Sunday Ticket licensing deal it signed in October 2014.
DirecTV’s content partners, meanwhile, can’t be thrilled, either, with ESPN paying $1.9 billion a year all by itself for NFL football.
Meanwhile, the lack of ability to present TV’s most popular programming source, the NFL, on wireless handsets undermines AT&T’s core tenant for DirecTV Now.
“We developed the platform with the mindset that it has to be mobile,” AT&T Entertainment Group CEO John Stankey said Monday while unveiling the platform at a New York City launch party. “The whole concept is mobile first.”
That’s not the only viewing limitation DirecTV Now users face: The platform is unplayable on the two biggest connected gaming consoles, Sony PlayStation and Microsoft Xbox One.