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Football is hard on marriage: If DirecTV can’t renew the NFL, AT&T may walk from the altar

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In the aftermath of AT&T’s astonishing $48.5-billion acquisition of DirecTV, critics and experts have begun dissecting the official SEC filing’s content and fine print. And according to an opt-out clause within the proposal, if DirecTV is unable to renew its lucrative contract with the National Football League to offer its exclusive NFL Sunday Ticket package, AT&T could technically walk away from the potential merger with the satellite TV provider.

The specific passage citing the opt-out reads: “The parties have also agreed that in the 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.” Further, the clause goes on to explain that AT&T won’t be able to claim any damages if the deal were to fall through, so long as DirecTV uses “its reasonable best efforts to obtain such renewal.”

AT&T’s acquisition of DirecTV is a full $3 billion greater than the other monster deal currently in the works between Comcast and Time Warner Cable. According to the current proposed terms, AT&T will pay DirecTV shareholders $95 per share in a combination of cash and stock. With DirecTV’s debt factored in, the deal’s total approximate worth is roughly $67.1 billion. The agreement will likely see DirecTV become a subsidiary of AT&T, though the satellite service provider will keep its current management and infrastructure.

The Sunday Ticket clause is revealing about just how important DirecTV’s extensive NFL package, which is worth an estimated $1 billion per year, has become to the pay-TV industry. The exclusive package, which offers users access to every NFL game during Sunday’s telecast (with the exception of NBC’s Sunday Night Football), is a huge incentive for its subscribers to choose DirecTV over its main competitor, Dish Network, or similarly priced cable packages.

However, it appears the merger won’t be sidelined – at least not by the gridiron coverage. Its unlikely DirecTV would allow another provider to outbid it for the Sunday Ticket contract, and all signs point to the company’s successful renewal of the coveted coverage. In a conference call today, DirecTV CEO Mike White expressed optimism that the NFL Sunday Ticket deal would be sealed by the end of the year. And considering what’s at stake, it would be surprising to see this facet of the deal being a roadblock in the long run.

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