If DirecTV fails to lock up NFL Sunday Ticket beyond this coming season, AT&T has given itself the right to back away from the colossal $48.5 billion acquisition announced yesterday. The out clause contained in the proposal’s fine print shows just how valuable of a property the NFL is. "The parties also have agreed that in the unlikely event that DirecTV’s agreement for the NFL Sunday Ticket service is not renewed substantially on the terms discussed between the parties, AT&T may elect not to consummate the merger," it reads.
The careful wording also says that AT&T won’t be able to collect any damages if this scenario plays out. DirecTV just has to prove that it "used its reasonable best efforts to obtain such renewal." And from the sounds of it, the satellite provider is already trying its best to get the deal done.
The NFL is hugely important
During today’s conference call focused on the merger, DirecTV CEO Mike White expressed confidence that the NFL will be back on board by the end of 2014. "Nothing changes from my perspective," he said. If successful, the AT&T/DirecTV deal isn’t expected to close for at least a year, so White has some time to work with. And there’s no guarantee that AT&T would immediately run away from the original plan if Sunday Ticket falls through. Neither side made it sound like a deal breaker during today's call, and DirecTV obviously has other assets and millions of subscribers that AT&T is very interested in.
But the clause must be there for a reason, and it puts the NFL in a position of tremendous power. The league will likely use that influence to sign an even more lucrative contract with DirecTV. A historic $48.5 billion merger may depend on it.