Copyright 2002 Gannett Company, Inc.
NEW YORK — One day after ending its $18 billion merger plan with EchoStar— and collecting a $600 million breakup fee —DirecTV scored a touchdown Wednesday against competitors.
The No. 1 satellite TV broadcasting company held off threats from No. 2 satellite company EchoStar, operator of the Dish Network, and cable rivals to keep its exclusive rights to offer NFL Sunday Ticket. That gives subscribers 14 National Football League games each weekend through the 17-week regular season.
The five-year deal is said to be worth close to $2 billion. It calls for about three times the annual fee of the current pact. The deal, however, will let the NFL sell a package to cable after 2005.
About 1.5 million of DirecTV's 11 million subscribers pay the additional $180 a year for the service, and it's a key marketing draw in signing up new customers.
DirecTV CEO Eddy Hartenstein says that since 1995, the NFL Sunday Ticket has become "our flagship service. It is the package that more than any other is the differentiator for us against cable and everyone else."
Also in the deal is that starting next season, DirecTV will beam to all its customers the NFL Channel, the league's new ad-supported, year-round network. It is creating the channel with help from former ESPN chief Steven Bornstein and will also try to get it aired on cable systems.
NFL Commissioner Paul Tagliabue says he's especially intrigued by new technology DirecTV says it will offer, including optional camera angles and high-definition broadcasts.
"The thing that is pleasing to us and to our 32 teams is that this positions us very well with respect to the future directions of television," Tagliabue says.
The NFL didn't have a completely free hand in making the deal. Contracts with CBS, Fox, and ESPN limit it from offering additional games on cable until 2005.
Fox has a strong incentive to hold the league to that. It's owned by Rupert Murdoch's News Corp., which tried to buy DirecTV last year and is considered the leading candidate to go after it again now that the EchoStar deal is dead. Murdoch would not like to see one of DirecTV's prime attractions damaged.
But, Steve Brenner, CEO of cable pay-per-view company In Demand — owned by Comcast, Time Warner and Cox — says he doesn't think the NFL considered cable seriously.
"We offered a lot of things that would have built a better mouse trap," including insertion of local ads, he says. "And we would have been happy to share the package. But I don't think anyone got a real offer."