Apple, NFL Could Create A Formidable Stream Dream Team

Apple often uses its World Wide Developers Conference as a showcase for its latest innovations. This year’s conference, which opens Monday, may feature fewer big announcements but could still provide big news for the streaming world if Apple teams up with the NFL on several key deals.

First off is the long-simmering successor deal for the NFL’s Sunday Ticket package, which the declining DirecTV is losing after this season. Negotiations have been simmering for months, but Apple and Amazon are reportedly the key bidders here.

Second is the league’s new mobile/tablet streaming service, NFL Plus, designed to replace deals it had with another declining tech company, Yahoo, and the big wireless carriers. The $5/month service is expected to launch July 1, according to Sports Business Journal, and would feature in-market live games among lots of other year-round football-related content.

As the world’s most valuable mobile and tablet maker, and operator of the most lucrative app market, Apple is primed to profit here regardless of any other NFL moves.

But the third piece of this is where it gets particularly interesting. The league is also reportedly seeking to sell a stake in NFL Media. Again, Apple and Amazon are considered the lead candidates.

Here’s why I think Apple may actually be most likely to team up with the NFL on these potentially transformative deals:

Amazon already has a hefty 11-year agreement to stream Thursday night football on Amazon Prime Video that starts this fall, taking over for Fox, whose broadcast it previously provided online. That was a big shift for the league, the first time a tech streaming company had won a stand-alone piece of the most valuable programming on television.

The league has long doled out programming contracts to all the major players, first in broadcast then adding ESPN and other cable outlets as that platform matured. As streaming becomes the way more people watch “TV,” does the NFL want to give even more of its prized content to Amazon while shutting out the other giant wallet out there? Should the league do so, it might constitute business malpractice.

While Amazon certainly has the resources to pay for another pricey NFL deal should CEO Andy Jassy make it a priority (he’s a sports fan and a minority owner of the Seattle NHL franchise), the company also faces plenty of headwinds in other parts of its business.

Its stock price is down painfully, almost $1,000 a share since the start of the year, especially after it recently acknowledged massive overspending on warehouse space and staffing. Will spending even more on NFL programming, for what’s essentially an add-on to Amazon Prime, make a difference in its share prices? Probably not.

Apple shares are down too, along with the rest of the market, though not quite as much as Amazon. But the company also can make a much better case for the value of adding multiple NFL deals to its still prodigious bottom line. Regardless of share prices, the company has continued to deliver record quarterly results despite pandemic, war, inflation, and supply chain headaches.

Apple’s TV+ streaming service, meanwhile, has had a great awards run over the last eight months, winning a Best Comedy Emmy for Ted Lasso and the first-ever Oscar Best Picture for a streaming service with CODA. Newer shows Pachinko, Slow Horses, and Severance are getting a lot of attention this Emmy season as well.

Apple is also expected to dramatically increase program spending, says Wedbush Securities analyst Dan Ives, who projects spending will jump from around $6 billion or $7 billion to $12 billion next year. Everyone else in Hollywood, of course, is busy reconsidering spending after Netflix’s disastrous April earnings report.

After launching with so little content that it didn’t charge subscribers for the first 20 months, now Apple TV+ is offering an increasing value proposition. The NFL programming would pair nicely with upcoming blockbusters like Martin Scorcese’s latest, Killers of the Flower Moon, and whatever comes out of an output deal with David Ellison’s Skydance Media (they’re the production company behind a whole bunch of Paramount/Tom Cruise projects, including this week’s $300 million global blockbuster, Top Gun: Maverick)

The company is already building out the TV+ live sports component, starting modestly with Friday Night Baseball in April. Those two games a week have been well produced. More importantly, they’re teaching Apple how to do live sports while also serving lots of ads for more than its own products.

Now imagine what’s possible if Apple gets that NFL Media stake along with Sunday Ticket, while NFL Plus is cued up across hundreds of millions of iPhones and iPads as subscriptions debut on the App Store.

Such a deal would allow Apple to create an integrated package of ad-supported subscription NFL content for both in-market mobile and out-of-market connected homes. It could be a powerful boost to TV Plus, and give Apple another subscription offering as it continues to grow its huge Services division.

Services includes all kinds of stuff, from Apple Care repair warranties to Apple Music, iCloud and Apple Fitness. Under CEO Tim Cook, the company has dramatically increased those revenues, up 27% last year to $68 billion.

For perspective, that revenue total is more than three times (!) the $22 billion market capitalization of Warren Buffett’s latest investment, Paramount Global.

The timing could be perfect, too.

Apple buys into the league’s media talent and experience, has a year to pull together the announcer/production/ad-sales teams it needs for Sunday Ticket, and gets a differentiating package of premium content. The result would be a daunting alternative to what’s on offer from the legacy media companies, Netflix, or even Amazon. That could be a game changer.