World Cup Mania Shows How Sports Is Driving Biggest Mergers

More Americans have watched the US soccer team in this World Cup than ever before. The two biggest announced acquisitions in the world in 2014 are for US pay-TV operators. Yes, there is a connection.

AT&T’s bid for DirecTV, and Comcast’s merger with Time Warner Cable, totaling a combined $134 billion, are tied together by a thread that today is driving many of the decisions in the world of pay-TV: Sports. AT&T will buy DirecTV only if the satellite-TV provider renews its exclusive Sunday night package of football games. Time Warner Cable is selling because it’s losing customers rebelling against high cable bills -- caused in part by the soaring cost of obtaining sports rights.

The two deals are prime examples of how sports programming’s immense popularity has become both the cause of, and solution to, pay-TV’s slowdown. Much of the value of sports programming for pay-TV operators stems from its immediacy. Unlike shows that can be watched later on Netflix, sports are typically watched in real time. This is great for advertisers, because commercials aren’t as frequently skipped, and it’s great for the pay-TV systems, because online options can’t offer a comparable substitute. The result: More media consolidation is on the way.