It’s official. The NFL’s Sunday Ticket is coming to YouTube, owned by Google. The deal is solid for both the league and Alphabet (GOOGL), Google’s parent company and a club holding company. It’s not hard to see why the National Football League would distribute games with such an established streaming player as YouTube. The hope is to convert as many YouTube users as possible into Sunday Ticket subscribers, thereby turning casual watchers into avid fans. For Alphabet, the deal adds a loyal viewer base to its vast ecosystem of services and products, providing greater opportunity to collect user data and target ads more effectively. The seven-year deal will cost YouTube about $2 billion a year for residential rights to The Sunday Ticket, CNBC reports. Since its debut in 1994, the Sunday Ticket has been on DirecTV’s satellite service. The move brings another valuable sports property from a legacy platform to streaming. Amazon (AMZN) already has Thursday Night Football, while Apple (AAPL) previously secured the rights to Major League Baseball and Major League Soccer games. The Sunday Ticket/YouTube arrangement should also prove attractive to companies that advertise during NFL games, as Alphabet can provide ad buyers with far more data than they could access with a linear and untargeted satellite distribution. What’s good for ad buyers is good for Alphabet as it has attracted more ad dollars across the company’s various offerings. It will also make YouTube’s premium offerings – a requirement to view games – more attractive and therefore serve to increase the subscription revenue generated by the platform. Subscription services are quickly becoming the bread and butter of many large tech companies. Investors value stable and reliable recurring revenue, especially at a time when online advertising as a whole has fallen on hard times in a challenging domestic and global macro environment. Alphabet’s third-quarter earnings and revenue, released in October, were weaker than expected, in part due to a slowdown in advertising spending. Ultimately, we don’t think this Sunday Ticket deal alone is a real needle mover at the moment. But we recommend it as an additional positive in the short to medium term and potentially much more than that in the long term. As noted at Thursday’s “Morning Meeting” for Club members, monetization opportunities aren’t exactly clear beyond ad revenue and additional YouTube subscriptions. But owning the rights to host Sunday NFL games will provide Alphabet with another way to attract viewers and show off what else its ecosystem has to offer. (Jim Cramer’s Charitable Trust is long GOOGL, AMZN, and AAPL. See here for a full stock list.) As a CNBC Investing Club subscriber with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim attends 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
In this Oct. 4, 2020 file photo, an empty Levi’s Stadium before an NFL football game.
Tony Avelar | Pennsylvania
It’s official. The NFL’s Sunday Ticket is coming to YouTube, owned by Google. The deal is strong for the league and Alphabet (GOOGL), the parent company of Google and a holding company of the Club.