Sports to be hit with downwards rights pressure | Media Analysis | Business
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All eyes in the sports and broadcast world are on the next round of English Premier League (EPL) rights negotiations with the expectation that the value of the crown jewels of UK sports broadcasting has peaked, and there will be more restructuring warns research from Ampere Analysis.
Premier League broacast PPV 16 NOv 2020
In its research note, Ampere noted that some sports rights have already seen a fall in value since the pandemic due to what it says is a mixture of Covid-linked wariness around large-scale spending, and underlying weakness in the broadcast business caused by the ongoing pressure from global OTT giants. It added that structural changes driven by the rise of online video have driven a lack of competition in recent rights tenders from traditional bidders, which has in turn led to a number of sports leagues rights deals falling in value.

Only just recently, the French football league was rescued from peril, in the short term at least when Canal Plus stepped in to buy at a huge discount the rights originally purchased by Mediapro after the pay-TV firm’s deal for Ligue 1 and Ligue 2 collapsed reducing the LFP’s expected broadcast rights totals from in excess of €1 billion to €670 million for the 2020-2021 season.

Other recent restructurings have seen the next round of the UEFA Champions League rights in Spain and Italy both bought for a lower price than the current deal; a fall in value of Germany’s top league, the Bundesliga, after a lack of competition in the most recent rights tender; and after it cancelled its $700 million Chinese streaming video rights contract with Suning Holdings, the EPL agreed a partnership with China’s leading digital sports media platform Tencent Sports at a fraction of the original deal.

Ampere’s research warned that making the situation worse is that the percentage of Internet users willing to pay to watch sport on TV fell from 42% in Q3 2019 to 34% a year later. The drop was found to be evident across all markets and afflicts even the major competitions. Unless the situation reverses soon, Ampere expects this will begin to impact broadcaster revenue as fewer fans sign up to sports packages and as existing subscribers scale back on their TV subscriptions.

And generally, while streaming giants remain interested in the sports market, they do not yet represent a substitute for income from the national broadcasters and pay-TV operators who currently control the bulk of high-end rights.

“While innovation and compensation best described the evolving sports market in 2020, the long-term impact of the pandemic will be characterised by two themes; market declines and changing viewer behaviours” said Ben McMurray, Analyst at Ampere Analysis. “The industry is still adapting to the effect of the new OTT players on the block, and while uncertainty around the future of the market remains, rights inflation will stall.”

Yet the study also showed that there may be ground for optimism. Ampere said unlike much Hollywood content, sport remains one of the few rights not subject to pullback by rights owners and pay-TV operators cannot afford to lose key events to OTT challengers on top of the TV and film rights they have already ceded.

There’s no question the pandemic has hit sports hard, but there are silver linings Daniel Harraghy, analyst at Ampere Analysis, added. “Even amid the uncertainty, content investment in sport remains high and will continue to remain vital for pay-TV providers – as well as OTT groups like DAZN and Viaplay. But in the wake of the damage caused by Covid-19 and the impact of the wider structural changes afflicting the TV market, rights owners now need to be thinking two cycles ahead about how they structure their rights packages to appeal to new bidders and how they drive competition for future deals.”