If DirecTV loses the NFL Sunday Ticket package, plenty of customers won’t want DirecTV. The company’s potential buyer may not want it, either.
According to Jon Erlichman of Bloomberg.com, a federal filing made in connection with AT&T’s proposed purchase contains this clause: “The parties also have agreed that in the event that DIRECTV’s agreement for the ‘NFL Sunday Ticket’ service is not renewed substantially on the terms discussed between the parties, the Company may elect not to consummate the Merger[.]“
The current contract between the league and DirecTV runs through 2014. Given the regulatory realities, it’s likely that the AT&T/DirecTV merger wouldn’t become final until 2015. Which means that the NFL’s relationship with DirecTV will be resolved before AT&T’s relationship with DirecTV is resolved.
This gives the NFL plenty of power over the process. If the league asks for too much money and the deal isn’t renewed, the AT&T/DirecTV merger gets blown up.
It also provides an AT&T/DirecTV competitor an opening for killing the deal, simply by overpaying for NFL Sunday Ticket.
From the AT&T/DirecTV perspective, it’s not an unlimited pot of money. The clause expressly refers to renewal “substantially on the terms discussed between the parties.” If the number is too high, AT&T can still walk away.
There’s an apparent limitation to AT&T’s ability to walk away. The tweet from Erlichman concludes with the word “but” after “Merger.” Which means that there’s some sort of limitation to AT&T’s power to pull the plug.
I’ll track down the filing to see what the “but” is all about after PFT Live. Until then, feel free to do it for me and send the link. A free one-year subscription to PFT Live is riding on it.
UPDATE 1:51 p.m. ET: Here’s the rest of the sentence. “[B]ut AT&T will not have a damages claim arising out of such failure so long as the Company used its reasonable best efforts to obtain such renewal.” Free one-year subscriptions to PFT to everyone who sent it in.