YouTube’s Expected NFL Deal Puts Spotlight on Tech’s Streaming Adventures

Whoever put together the memo about big tech learning financial discipline appears to have left Alphabet CEO Sundar Pichai off the distribution list. That’s assuming reports that YouTube will pay $2.5 billion a year for the NFL’s Sunday Ticket are accurate. Paying top dollar for live sports programming is a great way to burn cash. DirecTV, which has been carrying the sports package, was reportedly losing $500 million a year on it—and paying just $1.5 billion a year! This deal is a good reason to sell Alphabet stock.

At the very least, the deal should prompt investors to push Alphabet to better explain its video streaming strategy. Presumably YouTube would use Sunday Ticket to help drive subscriptions for its cable TV-like streaming service YouTube TV (yes the names are confusing but YouTube TV is more like Comcast’s Xfinity than YouTube), which is also how DirecTV used the service. That’s fine, but profit margins for the operations of cable TV like services aren’t great because owners of programming charge such high fees. So how does spending even more money on programming make sense?