It was about 3 months ago when I wrote that Sirius XM may work on the NFL deal sooner rather than later. With a potential lock-out coming after this season, the NFL is trying to get as much done as possible. Already they have a TV deal in place that pays the league even if there is a lock-out. The competition in television is such that the NFL was able to work out a guaranteed money deal. This may not be the case with satellite radio.
When the first NFL deal was signed by Sirius there were some that felt the content was too expensive, and that the NFL was widely available elsewhere. Fast forward 5 years and we now have the NFL available on even more platforms than ever. With Verizon the NFL has an app that actually streams Sunday Night and Thursday night games. The app also gives instant scoring updates and summaries (including highlights). It is actually pretty slick, and I have used it many times to catch up on the action while I am working or doing other things. The app even sends me news stories each day! It is through this app, and not television or radio, that I found out Randy Moss was traded from my Patriots to the Vikings.
So here we are with Sirius XM in the midst of negotiations with the National Football League. The content is more diluted than ever, and the NFL still manages to command top dollar. Is it worth it? My answer is YES. The company does not want to be without this content. It is real estate that should not be given up to another medium. In this business you don't want to be the odd man out. Even though this content is widely available, it is better to have it than not.
What Sirius XM needs to do is bring up the dilution in the negotiations. They need to bring up the value satellite radio gives the NFL in terms of exposure and games made available for out of market fans. The NFL deal will not come cheap, but this deal should be less expensive than the last one and it is most important to keep this content available on Sirius XM's airwaves.
One huge advantage of the NFL is the cross-over value Sirius XM is getting from XM subscribers adding the Best Of Sirius to their subscription. Well over 1 million XM subscribers are shelling out an additional $4.00 per month to get the Best Of Sirius. People can debate whether this is for the NFL or Stern, but in the end the company is enjoying an additional $60 million annually because of the Stern/NFL combo on Best Of. On the flip side Sirius subscribers signing up for Best Of XM are about two thirds of this number. There is value in the brand of the NFL. In my opinion there is enough revenue from the Best Of people alone to justify another deal with the NFL. How long this BEST Of situation lasts is still unknown, but perhaps Satellite Radio 2.0 will deliver additional pricing options that make premium sports content an even bigger revenue stream. Only time will tell.
Mel Karmazin has indicated that the NFL deal is being negotiated. Some of the "delay" in an announcement may not relate to the terms of the deal, but rather the NFL Players Association. When I wrote about the television contract a few months ago I stated then that the Players were already slamming the TV deal that guaranteed money with or without a 2011 season. A new satellite radio deal will certainly grab the attention of the Players Association as well. Certainly this is beyond Sirius XM's control, but it is something they will need to contend with.
In my opinion the delay in news on this front is not because the terms, but rather the timing and type of announcement that the NFL needs. This means that news and/or details of a deal could be something we wont hear about for another month or so.
Position - Long Sirius XM Radio