Technology

Amazon likely front-runner for multiyear NFL Sunday Ticket deal, sources say

Published

3 years ago

September 10, 2021

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Dallas Cowboys wide receiver Brandon Smith during the game between the Dallas Cowboys and the Jacksonville Jaguars

Matthew Pearce | Icon Sportswire | Getty Images

Amazon is in talks to acquire the rights for the National Football League’s “Sunday Ticket” package and is seen as the front-runner by others involved in talks with the league, according to people familiar with the matter.

Amazon has a serious interest in the multiyear package of out-of-market games, said the people, who asked not to be named because the discussions are private. Amazon in May agreed to pay about $1 billion per year to become the exclusive provider of Thursday Night Football games beginning next year. That deal made Amazon Prime Video the first-ever streaming service to own an exclusive NFL broadcast package.

An Amazon spokesman declined to comment on “Sunday Ticket” discussions.

The NFL is expected to ask for $2 billion to $2.5 billion per year for the package and wants to wrap up discussions before the season ends in February, two of the people said. “Sunday Ticket” has been owned by DirecTV for the past 27 years. Talks are progressing with interested parties, suggesting the league is getting closer to choosing a new provider, said the people.

DirecTV, which AT&T spun out as a new company last month, renewed “Sunday Ticket” in 2014 for eight years. The current contract ends after the 2022-23 season.

NFL Commissioner Roger Goodell told CNBC on Wednesday the out-of-market Sunday game package “maybe will be more attractive on a digital platform” as streaming platforms continue to add subscribers at the expense of traditional pay-television. Goodell also suggested to CNBC that the league is looking for one strategic partner to acquire not only “Sunday Ticket” rights but to also invest in NFL Network, which airs NFL content all year, and NFL RedZone, which shows live footage of game action when teams are close to scoring touchdowns. The NFL currently owns both NFL Network and NFL RedZone.

Amazon has competition for the Sunday game rights. ESPN Chairman Jimmy Pitaro told Bloomberg this week that “Sunday Ticket” is “an incredibly valuable product” and acknowledged that Disney has had exploratory conversations with the league. The Information news site reported that Apple has also expressed interest in the package. NBCUniversal’s Peacock is not expected to bid for the rights, according to a person familiar with the matter.

Several media executives involved in the discussions told CNBC they viewed Amazon as the favorite to win the rights to the package. NBC News reported Amazon and ESPN’s early interest in the package in July.

DirecTV’s tenure

DirecTV is still considering its options but may not have the balance sheet to compete with Amazon or Apple, whose market valuations are close to or above $2 trillion, two of the people said.

DirecTV has paid about $1.5 billion per year for “Sunday Ticket” for the past seven seasons and currently charges about $300 for the package as an add-on. The satellite TV provider also now offers “Sunday Ticket” as a component of its “Choice,” “Ultimate,” and “Premier” pay-TV packages.

DirecTV has lost money on “Sunday Ticket” for many years. At its current $300 price point, DirecTV would need 5 million subscribers to break even. DirecTV has averaged closer to 2 million “Sunday Ticket” subscribers for many years, according to a person familiar with the matter. Executives at DirecTV and its majority owner AT&T have argued that “Sunday Ticket” has become increasingly diluted over the years as the NFL removes Sunday games and adds Thursday, Saturday and Monday Night games.

Still, DirecTV was willing to use “Sunday Ticket” as a loss leader if it turned subscribers into year-long satellite-TV customers. That way, the company could recoup some of its losses by collecting monthly pay-TV fees during the NFL season and its seven-month-long offseason.

Why Amazon makes sense

The NFL may be able to significantly expand the audience for “Sunday Ticket” by separating the product from DirecTV. The satellite-TV provider allows customers to stream “Sunday Ticket” without becoming a DirecTV customer only if they live in areas where they don’t have access to DirecTV. A streaming service would allow anyone access to “Sunday Ticket” without the additional restriction of having to switch one’s pay-TV provider to DirecTV. That could unlock the product to millions of Americans who buy cable TV service bundled with broadband. DirecTV doesn’t offer high-speed Internet service.

Amazon also has an ancillary business it wants to push to “Sunday Ticket” subscribers: an Amazon Prime membership. Amazon’s video strategy has long revolved around getting people hooked on Prime. In its efforts to be “The Everything Store,” Amazon can use live sports to make a direct connection to fans who are also interested in buying sports merchandise. Amazon has reached agreements with Major League Baseball’s New York Yankees and Major League Soccer’s Seattle Sounders in the past year as it tries to make an audience connection with Prime Video and live sports.

Amazon also hopes to extend Prime Video’s business with its pending $8.45 billion acquisition of MGM and its “Thursday Night Football” purchase to build a burgeoning advertising business, which grew 87% year over year in the second quarter to more than $7.9 billion. While Amazon still trails digital advertising behemoths Facebook and Google in U.S. market share, the company grabbed 10.3% of U.S. digital ad dollars last year, up from 7.8% in 2019, according to a report from research firm eMarketer.

Amazon Web Services has also been the NFL’s technology provider in the development of Next Gen Stats, which has analyzed and stored data on every NFL player and play since 2017. The NFL has a history of working with broadcast partners with which it has established relationships. The league re-upped broadcast deals with all of its existing media partners earlier this year. While Apple’s spending power rivals Amazon’s, Apple doesn’t share the same relationship history with the NFL.

Buying live sports rights also allows Amazon to expand its business while regulators crackdown on big technology acquisitions. Amazon has previously been able to grow into new businesses by acquiring companies Whole Foods, Ring and Zappos. That avenue may be temporarily restricted as new FTC Chair Lina Khan, who has been critical of Amazon’s growing market power and influence on the economy, examines Amazon’s deals. How regulators view Amazon’s pending MGM deal will be a window into Khan’s thinking.

— CNBC’s Jabari Young assisted with this story.

Disclosure: NBCUniversal is the parent company of CNBC.

WATCH: NFL commissioner Roger Goodell on Verizon partnership, “Sunday Ticket”

Technology

Bitcoin just completed its fourth-ever ‘halving,’ here’s what investors need to watch now

Published

13 hours ago

April 20, 2024

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Bitcoin just completed its fourth-ever 'halving,' here’s what investors need to watch now

Dado Ruvic | Reuters

The Bitcoin network on Friday night slashed the incentives rewarded to miners in half for the fourth time in its history.

The celebrated event, which takes place about once every four years as mandated in the Bitcoin code, is designed to slow the issuance of bitcoins, thereby creating a scarcity effect and allowing the cryptocurrency to maintain its digital gold-like quality.

There may be some speculative trading on the event itself. JPMorgan said it expects to see some downside in bitcoin post-halving and Deutsche Bank said it “does not expect prices to increase significantly.” However, the impact may be bigger months from now, even if bitcoin continues its trend of diminishing returns from its halving day to its cycle top. Two key things to watch will be the block reward and the hash rate.

“While the upcoming Bitcoin halving will create a supply shock as the previous ones had, we believe its impact on the cryptocurrency’s price could be magnified by the concurrent demand shock created by the emergence of spot bitcoin ETFs,” said Benchmark’s Mark Palmer.

The bigger immediate impact will be to the miners themselves, he added. They’re the ones that run the machines that do the work of recording new blocks of bitcoin transactions and adding them to the global ledger, also known as the blockchain.

“Miners with access to inexpensive, reliable power sources are well positioned to navigate the post-halving market dynamics,” said Maxim’s Matthew Galinko in a note Friday. “Some miners, many that are not public, could exit the market with a combination of poor access to power, efficient machines, and capital. Miners with capital and relatively expensive power will likely find opportunities in the wake of potential consolidation and disruption driven by the halving.”

The block reward

Miners have two incentives to mine: transaction fees that are paid voluntarily by senders (for faster settlement) and mining rewards — 3.125 newly created bitcoins, or about $200,000 as of Friday evening, when the mining reward shrunk from 6.25 bitcoins. The incentive was initially 50 bitcoins.

The reduction in the block rewards leads to a reduction in the supply of bitcoin by slowing the pace at which new coins are created, helping maintain the idea of bitcoin as digital gold — whose finite supply helps determine its value. Eventually, the number of bitcoins in circulation will cap at 21 million, per the Bitcoin code. There are about 19.6 million in circulation today.

“Miners utilize powerful, specialized computer hardware to validate transactions on the Bitcoin network and record them permanently on the blockchain,” Deutsche Bank analyst Marion Laboure said. “This process, known as mining, rewards miners with newly minted bitcoins. But with each halving, the reward to mining is decreased to maintain scarcity and control the cryptocurrency’s inflation rate over time.”

The hash rate

Historically after a halving, the Bitcoin hash rate – or the total computational power used by miners to process transactions on the Bitcoin network – has fallen, pricing some miners out of the market. It generally recovers in the medium term, however, Laboure pointed out.

The network hash rate has been hitting all-time highs for months as miners tried to take market share ahead of the halving. Growth in the Bitcoin hash rate dilutes individual miners’ contribution to the network hash rate.

“In the past three halvings, the network recovered its pre-halving hash rate levels within an average of 57 days,” she said. “It is also likely that the current elevated prices of bitcoin may limit this short-term dip in the hash rate, as bitcoin miners enjoy record high profits in the lead-up to the halving.”

Palmer said the impact of the halving on bitcoin miners’ economics could be “more than offset over time” if bitcoin’s price rallies keep pushing the cryptocurrency to new highs in the months ahead.

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Technology

The Bitcoin network completes the fourth-ever ‘halving’ of rewards to miners

Published

13 hours ago

April 20, 2024

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The Bitcoin network completes the fourth-ever ‘halving’ of rewards to miners

Breaking down Bitcoin's upcoming 'halving' event

The Bitcoin network on Friday evening completed its fourth “halving,” reducing the rewards earned by miners to 3.125 bitcoins from 6.25.

The price of bitcoin has been volatile ahead of the event, and fell about 4% this week to trade around $64,100, according to Coin Metrics.

Mechanically, the halving itself shouldn’t affect the price of bitcoin in the short term, but many investors are expecting big gains in the months ahead, based on the cryptocurrency’s performance after previous halvings. After the 2012, 2016 and 2020 halvings, the bitcoin price ran up about 93x, 30x and 8x, respectively, from its halving day price to its cycle top.

The event is a big test for mining companies, however.

“All else equal, the halving will cut industry revenues in half, triggering a wave of consolidation and business closures, while (hopefully) rationalizing the network hashrate and industry capex, which is ultimately good for the remaining operators,” JPMorgan analyst Reginald Smith said in a recent note to investors.

Hash rates are a measure of the computational power used to process transactions on the bitcoin network. The larger a miner’s hash rate, the greater of a revenue opportunity it has.

Mining stocks have been volatile in the days leading up to the event. Many are down by double digits for the year, after rallying between about 300% and 600% in 2023. Riot Platforms, for instance, is down about 41% in 2024 through Friday’s close, but it surged 356% in 2023.

“The market so far has seen bitcoin mining stocks as mere BTC proxies, in absence of bitcoin ETFs,” said Bernstein analyst Gautam Chhugani. “[The] halving would further differentiate the low cost, high-scale consolidating winners vs. rest of smaller miners which may be disadvantaged post-halving.”

Mining stocks in 2023 and 2024

	2024 YTD	2023 return
MARATHON DIGITAL (MARA)	-30.2%	586.84%
RIOT PLATFORMS (RIOT)	-41.08%	356.34%
CLEANSPARK (CLSK)	54.4%	440.69%
IRIS ENERGY (IREN)	-31.68%	472%
CIPHER MINING (CIFR)	-7.63%	637.50%

Still, speculators may still trade on the event. Another JPMorgan analyst, Nikolaos Panigirtzoglou, said Thursday that he expects the near-term bitcoin price to fall after the halving, citing overbought conditions and prices that are still above the cryptocurrency’s comparison to gold when adjusted for volatility. He also pointed to subdued venture capital funding of crypto projects.

Analysts at Deutsche Bank have a similar view.

“[The] Bitcoin halving is already partially priced in by the market and we do not expect prices to increase significantly following the halving event,” the firm’s Marion Laboure said in a note Thursday, adding that it “has been widely anticipated in advance due to the nature of the Bitcoin algorithm.”

“Looking ahead, we continue to expect prices to stay high,” she added, citing expectations of future spot Ethereum ETF approvals, future central bank rate cuts and regulatory developments.

Bitcoin is currently trading at just under $64,000, roughly 13% off its March 14 all-time high of $73,797.68.

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Technology

Drone startup Zipline hits 1 million deliveries, looks to restaurants as it continues to grow

Published

20 hours ago

April 19, 2024

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Autonomous delivery drone startup Zipline said Friday that it hit its 1 millionth delivery to customers and that it’s eyeing restaurant partnerships in its next phase of growth.

The San Francisco-based startup designs, builds and operates autonomous delivery drones, working with clients that range from more than 4,700 hospitals, including the Cleveland Clinic, to major brands such as Walmart and GNC. It’s raised more than $500 million so far from investors including Sequoia Capital, a16z and Google Ventures. Zipline is also a CNBC Disruptor 50 company.

The company said its zero-emission drones have now flown more than 70 million autonomous commercial miles across four continents and delivered more than 10 million products.

The milestone 1 millionth delivery carried two bags of IV fluid from a Zipline distribution center in Ghana to a local health facility.

As the company continues to expand, it will bring on Panera Bread in Seattle, Memorial Hermann Health System in Houston, and Jet’s Pizza in Detroit.

Zipline CEO Keller Rinaudo Cliffton told CNBC that 70% of the company’s deliveries have happened in the past two years and, in the future, the goal is to do 1 million deliveries a day.

“The three areas where the incentive really makes the most sense today are health care, quick commerce and food, and those are the three main markets that we focus on,” Rinaudo Cliffton said. “Our goal is to work with really the best brands or the best institutions in each of those markets.”

The push into restaurant partnerships marks an “obvious transition” he said, due to the continuing growth in interest in instant food delivery. Zipline already delivers food from Walmart to customers.

“We need to start using vehicles that are light, fast, autonomous and zero-emission,” Rinaudo Cliffton said. “Delivering in this way is 10 times as fast, it’s less expensive … and relative to the traditional delivery apps that most restaurants will be working with, we triple the service radius, which means you actually [get] 10 times the number of customers who are reachable via instant delivery.”

Zipline deliveries for some Panera locations in Seattle are expected to begin next year, the Panera franchisee’s Chief Operating Officer Ron Bellamy told CNBC. Delivery continues to grow for its business, even in an inflationary environment, he said. Costs with Zipline are anticipated to be on par with what third-party delivery is now, he added, with the hope of that cost lowering over time.

“I’m encouraged about it, not just even in terms of what I can do for the business, but as a consumer, I think at the end of the day, if it is economical, and it delivers a better overall experience, then the consumer will speak,” Bellamy said.