In recent years, Amazon.com (AMZN) showed that it is willing to spend quite a bit of money on the rights to stream live sports events. It agreed to pay the NFL $50 million for 10 Thursday Night Football games in 2017 and may have shelled out more when it renewed that contract. It also signed a deal with the Premier League to stream 20 soccer matches in the U.K., with the broadcast rights costing between $23 million and $38.5 million per game.
But Amazon could be about to make its biggest sports move yet. The retail giant reportedly made an offer for 21st Century Fox’s 22 regional sports networks, which have an estimated value of around $20 billion. They’re available because the U.S. Department of Justice is requiring Disney to divest the regional sports networks shortly after it acquires them as part of its $71 billion deal for many of Fox’s assets. (Read: Anti-trust concerns.) Disney wants to get a buyer lined up before it closes to ensure there are no hangups with the rest of the deal. Amazon could be that buyer.
So, why sports?
Sports remain one of the few must-watch television events. Last year, Sunday Night Football was the most popular regularly scheduled program in the U.S., and 85% of the top broadcasts were sports events.
Amazon wants to capitalize on the popularity of live sports to increase the incentives for people to sign up for its Prime service, which includes access to streaming video. Expensive sports rights could be a loss leader for potentially bringing in, and keeping, those valuable customers. But there’s another key reason — most sports broadcasts have built-in commercial breaks. Amazon can use that time as a testing ground for its burgeoning ad business.