LOS ANGELES (Reuters) - DirecTV DTV.O extended its exclusive contract to sell the Sunday Ticket package of National Football League games, and sources said the company will pay $1.5 billion a year to keep the popular offering that has helped attract subscribers.
The agreement announced on Wednesday removes a potential roadblock to AT&T Inc’s (T.N) proposed $48.5 billion purchase of the satellite TV provider. AT&T had the right to pull out of the deal if DirecTV was unable to renew its Sunday Ticket pact.
Sources familiar with the agreement said DirecTV’s annual payments to the NFL would average $1.5 billion for eight years.
DirecTV sells the package of Sunday games to its subscribers for about $300 a year, a key marketing advantage over cable TV competitors. Roughly 2 million people receive the service, which allows them to watch games outside of their local markets.
NFL games rank among the most-viewed shows on television. Americans are tuning in at even greater numbers this year than last year, according to early season ratings, a sign that a domestic violence scandal has not dented the league’s overall popularity. [ID:nL2N0RU2G8]
DirecTV pays an estimated $1 billion annually for its current Sunday Ticket rights, which were set to expire at the end of the 2014-2015 season.
The new agreement expands DirecTV’s rights to stream the games live on mobile devices and broadband. The company will continue to broadcast the NFL Red Zone Channel and the DirecTV Fantasy Zone channel.
The cost increase DirecTV will pay is at the low end of the company’s guidance to investors, a DirecTV spokesman said.
Regulators are still reviewing AT&T’s proposed purchase of DirecTV.
Shares of DirecTV rose $1.16, or 1.3 percent, in after-hours trading to $87.75.
Reporting by Lisa Richwine; Editing by David Gregorio and Lisa Shumaker