Apple, Google, Netflix, the Olympics and the NFL

NEW YORK (TheStreet) -- With all the speculation about Google (GOOG) making a play for some flavor of National Football League broadcast rights, it probably makes sense to address a lofty piece, published by All Things D earlier this week, that fantasizes about Netflix (NFLX) moving into live events.

But first, TheStreet's Chris Ciaccia is absolutely right: Apple ( AAPL) must be part of any NFL-related speculation. And, make no mistake, that's all we have here. The All Things D reporter has nothing solid. He screamed "fire" then qualified his lead several times. That said, it's only a matter of time before technology companies get more involved in live events, particularly sports.

Why wouldn't professional sports leagues look to big tech? There's no reason not to. Companies such as Apple have more money to blow than the big media establishment. While a deal with an Apple or Google doesn't necessarily broaden distribution, it certainly could enhance it.

However, the leagues will have to be sure not to burn bridges with partners such as DirecTV ( DTV). Though they haven't gone full-blown digital yet (Ciaccia's story provides examples of existing NFL/digital partnerships), the NFL has made more games available, outside of NFL Sunday Ticket, through outlets such as The NFL Network and the expansion of games beyond Sunday and Monday nights.

So, again, it's just a matter of time before a non-traditional player meaningfully enters the picture.

But the key is cash, which makes it funny to read through Ben Elowitz's OpEd, where the tech entrepreneur argues Netflix should get into live events.

First, Elowitz didn't break any ground. Here's a January 2012 Seeking Alpha piece where I work in the Canadian sports media landscape to highlight the importance of premium content.

So, yes, Elowitz is correct. Netflix absolutely must diversify itself to stay relevant. That's what original programming is all about after all. However, Elowitz dismisses Netflix's precarious cash situation when he makes horribly misguided statements such as:
With TV network ratings shrinking these days, at what point does Netflix surpass NBC in viewership and become a credible bidder for streaming rights to the Olympics? NBC has those rights locked down through 2020, but if the audience continues to shift online, we could be just two more Summer Olympics away from the first completely cordless Games.

I won't even get into the context-less statement about "shrinking" ratings.

More to the point, the idea that Netflix will ever be able to afford the Olympics -- if the company continues on its present trajectory -- is absurd. We're talking billions of dollars for a company that has had to raise cash twice in the last two years and likely will end up going to market again.

Elowitz makes an illogical leap from something NFLX bulls choose to ignore -- the company might not survive(!) -- to broadcasting the freaking Olympics. Earlier in his article, he leaps, but falls between buildings again. I agree with Elowitz when he says ...
Netflix won't need to spend a billion dollars on NFL rights ... Instead, it could start organically, with a live stream of the White House Correspondents' Dinner roast served up to its political documentary fans and comedy buffs.

Perfectly sensible. I think it's a good strategy. Might even happen. However, to argue that Time Warner's ( TWX) HBO started out with hockey so Netflix can whimsically undergo the same metamorphosis ignores the present state of Netflix's business. Things like its cash flow statement and off-balance sheet obligations (over $5.5 billion as of the most recent quarter). But, Elowitz lives in the land of startups where money flows for great, even if wholly unrealistic ideas, not necessarily viable business models.

Here's something more realistic that Elowitz -- and Netflix -- should consider today.

Netflix does not operate from a position of strength. Publicly, it talks about being the next HBO; privately, it would kill for the content HBO refuses to sell it. Reed Hastings and Ted Sarandos should put together the best "beg" (I stole that from Seinfeld) they can muster and try to weasel in on an existing deal.

An event such as the Olympics throws more at NBC than it can handle. It has to farm programming out to MSNBC and CNBC thus preempting shows such as Jim Cramer's "Mad Money." In this case, a Netflix partnership for the overflow could make sense.

However, let me call myself out -- my argument sucks badly as well.

Elowitz and the rest of the world that spews unconditional love Netflix's way miss one very important point. As mentioned, Apple and Google have more money -- and always will -- so they're the more logical partners, especially as they establish and eventually surpass Netflix's living room presence. And, more importantly, the old guard media knows how to stream !! It doesn't need Netflix; in fact, it merely permits Netflix's existence. It can pull that permit on a dime.

Traditional televisions streams via apps such as HBO GO and WatchESPN. And, as I have argued a million times, they control the pace at which these initiatives evolve. Netflix doesn't.

Netflix absolutely can be a player, however, don't let guys like Elowitz misinform you. They will not do it as some powerful leader of a space. They will need to find a way to hitch a ride with somebody else if they ever want access to the most prime appointment viewing that exists today and isn't going anywhere tomorrow. And if they hitch a ride they will do it on terms that favor the content owners, not Netflix.

-- Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a columnist and TheStreet's Director of Social Media. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.

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