DirecTV quietly kicks off new NFL online package

Reuters

* DirecTV's NFL package available to non-subscribers

* New service could hurt core business; DirecTV, analysts

* Online offering launches Sept. 12

By Liana B. Baker

NEW YORK (Reuters) - DirecTV will make its popular NFL Sunday ticket package available online to non-DirecTV subscribers for the first time on Sept. 12, but plans a low-key promotion of the new product.

Only customers who cannot install satellite dishes or get satellite reception can buy the service, which costs $350 and lets viewers watch football games on smart phones, tablets and computers.

"We're not marketing it heavily so it'll have limited takeoff," said Derek Chang, DirecTV's executive vice-president of content strategy in an interview.

Chang said while the opportunity to reach customers who do not have access to DirecTV is still mostly untapped, online-only products like the new NFL service still need to be tested to avoid hurting DirecTV's core business.

The online option to watch games has been available to DirecTV's NFL Sunday Ticket subscribers since 2007.

NFL Sunday Ticket, with about two million subscribers, lets fans watch every NFL game on Sundays and not just the ones being broadcast locally.

It is a major piece of DirecTV's strategy to win customers from cable companies like Comcast Corp > and Time Warner Cable Inc. Chief Executive Michael White said in a quarterly conference call on Aug. 5 that DirecTV's focus for the third quarter "is all around NFL Sunday Ticket."

Todd Mitchell, a Kaufman Bros analyst said Sunday Ticket helps DirecTV win new subscribers but is not as profitable as the other parts of the company's business.

Analysts said the program could eat into DirecTV's profit and waste advertising dollars on a potentially small market if it is pushed too strongly.

Steve Clement, an analyst at Pacific Crest Securities said DirecTV is right to be cautious.

"Significantly, NFL Sunday Ticket has been an important market share driver for DirecTV and damaging that is potentially cannibalistic," he said.

But expanding Sunday ticket to non-DirecTV subscribers is another way to help offset the pricey NFL contract DirecTV reached with the league in 2009, estimated to be worth $1 billion a year over four years though the 2014 season.

DirecTV's Chang said he could not say how many new subscribers DirecTV's expects to gain from the new online service. Todd Rethemeier, an analyst at Hudson Square Research said he expects tens of thousands of people to sign up.

Rethemeier said another reason for the low-key launch might be because of the small market of sports fans who live in large buildings in urban areas where they cannot install satellite dishes.

The program was tested out in New York City during the last NFL season, since millions of residents live in apartment buildings and condos where satellite dishes are banned.

DirecTV shares were trading up 0.3 percent to $37.91 on Nasdaq on Tuesday afternoon. The shares are up about 12 percent this year. (Reporting by Liana B. Baker; Additional reporting by Yinka Adegoke; Editing by Tim Dobbyn) (liana.baker@thomsonreuters.com, +1 646 223 6179)

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