YouTube TV wins NFL Sunday Ticket, but package ‘is a loss leader,’ analyst warns

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YouTube (GOOGL) has acquired exclusive rights to the NFL Sunday Ticket, but don’t expect to make money from the package, warns one analyst.

Michael Pachter, managing director of equity research at Wedbush, told Yahoo Finance Live: “I don’t think they make a penny at that level.”

Making off-market games available to fans nationwide, Sunday Ticket will be available as an add-on package on YouTube TV and as a standalone a la carte on the YouTube primetime channel beginning with the 2023 NFL season. . Terms of the deal were not disclosed.

However, a recent New York Times report suggested that YouTube was willing to pay as much as $2.5 billion to acquire the rights.

The report noted that the NFL could receive additional payouts depending on the number of YouTube subscribers added to the service and other performance benchmarks.

Macquarie Group analyst Tim Nollen previously told Yahoo Finance Live:

The cable provider previously boasted 1.5 to 2 million Sunday Ticket subscribers, each paying around $300 per season. On YouTube TV, he has over 5 million subscribers and trial users as of July.

“Five million subscribers is not enough,” emphasized Pachter. “Even if he paid all 5 million people $400 a year, they would barely cover the cost.”

Still, despite the lack of profitability and a very high price tag, Pachter noted that YouTube may be best positioned to take advantage of the package.

“I think they’re smart about how they divide up content,” Pachter said, suggesting the platform could more easily sell games to bars and restaurants. It might work better than that, and it’s available to anyone with an internet connection, so it’ll probably pay off in the end.”

“Sports are expensive”

YouTube Wins NFL Sunday Tickets

According to PwC’s biannual US Deals Outlook, demand for live sports, including sports-related industries such as sports betting, could drive future M&A activity in the media sector.

“There is a lot of money in sports, and delivering live sports to streaming platforms is an area that has not yet been fully tapped,” said the largest media and entertainment-focused consulting firm. Jon Christian, EVP of Digital Media Supply Chain at Qvest, said: He previously told Yahoo Finance.

“The question is can they put a pencil in it? Because the price of content is so high. Will they be able to get the subscribers they need to be profitable in that business now? ”

Nollen agreed that the high cost makes it “hard to calculate,” but it may be a necessary step forward for companies hoping to survive in the streaming wars.

“Linear subscribers are at a loss,” says Nollen. “Streaming subscribers are still growing. Competition is fierce, but they are still growing. Over time, more sports could help attract more users to these platforms.” ”

“How are they going to make enough money to justify doubling the price? You’d think they’d have to double the price of their streaming service,” Nollen said.

Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. follow her on her twitter @alliecanal8193 Send an email to [email protected].

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