Tuesday's AT&T - Time Warner Decision Has Seismic Implications for Next Decade-Plus of Live Sports Rights

Ryan Glasspiegel

The next half-decade features a fascinating array of top-tier live sports rights coming to market, and a major domino in how all of the television bidders will jockey and proceed takes place on Tuesday when judge Richard J. Leon rules in Washington D.C.’s federal district court on whether AT&T and Time Warner are able to merge and/or under what conditions.

What’s going on here?

The New York Times has a good explainer about why this decision will have far-reaching impact in all industries — affecting potential deals as derivative as whether CVS can acquire Aetna — and how basically at issue is the fact that in this merger the AT&T-owned satellite distributor DirecTV would be be part of the same company as channels like CNN, TNT, TBS, and HBO. This in theory could lead DirecTV to squeeze those channels’ competitors on affiliate fees, or those networks to squeeze DirecTV’s competitor cable companies. The justice department sued, arguing that the conglomerate should have to sell either the cable networks or DirecTV.

Comcast vs. Disney

The sports implications of this are immense: First, the ruling will impact whether and to what extent Comcast goes after the 21st Century Fox assets that the company has agreed to sell to Disney. This includes the wildly profitable regional sports networks, which combine to air about half the country’s local MLB, NBA, and NHL broadcasts.

If the deal ultimately goes through, expect Comcast to be very aggressive and at least make Fox shareholders consider whether they’d rather a bigger lump sum of cash now, or if they more value the sports and entertainment synergies that going to Disney would garner in the long run. If they believe that those assets in the hands of Robert Iger and Disney would make the new company the winner in a war over Netflix and Amazon, they could still choose that option over the sale to Comcast. Nevertheless, the AT&T/Time Warner merger being consummated would trigger all that getting put on the table.

So many sports rights are coming up in America

Further, DirecTV is the rights holder to NFL Sunday Ticket, while Turner Sports airs the NBA, March Madness, MLB Playoffs, and Champions League. They also own Bleacher Report, which has massive digital distribution and recently launched the BR Live app for over-the-top streaming. If the two combined, they would have the muscles to go after more NFL rights for 2021/22 when all of the league’s TV packages — Sunday Ticket and ESPN’s Monday Night Football in 2021, NBC’s Sunday Night Football and the CBS and FOX packages in 2022 —  are up.

And there’s a buffet of other rights that are up around the same time. The MLB, NHL, and Champions League rights are up in 2021. The English Premiership and MLS are up in 2022. The Big Ten’s deal with Fox and ESPN and the SEC’s deal with CBS are up in 2023. In the few years after that, we’ll see the Big 12, Pac-12, College Football Playoff, and finally the NBA rights come up again.

When will digital companies be serious threats for rights?

Over the last few years, we have seen digital companies like Amazon, Facebook, Twitter, and Yahoo dabble mostly in rights that are either non-exclusive or are the table scraps of what the traditional television networks really want. Netflix hasn’t really gotten into the games at all. Meanwhile, the TV networks are scrambling to fortify their positions. It’s telling, for example,  that UFC went to ESPN and WWE did a split with NBC/Universal and FOX. FOX also snared Thursday Night Football. Meanwhile, the international PGA rights went to Discovery Networks for $2 billion.

The biggest investment we’ve seen so far from the digital outlets (that we keep hearing will be a major threat to the TV networks for live sports rights) was Amazon’s recent deal with the Premiership to air 20 exclusive games a year. In another example, Facebook has one weekly exclusive MLB game, which never fails to drive the fans of the two teams playing in it up the wall. These aren’t nothing, but they’re also not headfirst dives into rights that are essential. Which major sports league will play the role of Hobbes in this classic comic, and get itself and a stream-first entity soaked in the rights?

Even if Judge Leon’s decision in the AT&T – Time Warner case winds up being appealed, it’s nonetheless a landmark domino as to how things will go in the jockeying for all these rights to come to market. It will be fascinating to see what happens.