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Will the Internet Giants Ever Take the Rights to English Premiership Football?

Bc

Well there still could in the current round of bidding as there are still two packages to play for. This bidding round for the 2019 to 2022 seasons has turned into a game of two halves. Sky and BT have maintained the status quo with Sky winning four packages of 128 games per season and BT winning one package of 32 games. The semi-truce between Sky and BT has worked in their favour, with the cost of Premiership football dropping. For Sky their annual bill will drop by £200 million to £1.2 billion, with improved rights. But who will get the remaining two packages?

There are some reports that the last two packages failed to reach their reserve price and it looks like the Premier League wants these remaining packages to go to some new entrants to increase the softening competition.

Industry spectator are waiting, even hoping, for some serious disruption in the UK football market. This has been seen briefly in the French and German football rights markets, but not from the Internet giants and not with any great success. A new entrant Arena took the Bundesliga rights for 2006 to 2009 away from the incumbent pay-TV provider Premier (which is now Sky Deutschland), but had to sublicense them all back to Premier after just one season, having failed to fully monetize them.  In France, in 2012 BeInSports/Al Jazeera started taking rights from the incumbent Canal Plus, but the auction for 2016-2020 Canal Plus reversed the trend.

But where do I think the Internet giants (Google, Apple, Amazon, Facebook and Netflix) stand in all this? They have the money to make a disruptive play but could it make economic sense? To help get our heads around the numbers it is worth considering Sky will now be paying £9.4 million per match and BT £9.2 million.

To put that is perspective, it is claimed that the Crown is the most expensive TV series every made with a season costing $130 million for 10 episodes, making it $13 million per episode. Game of Thrones was costing $10 million per episode but is expected to rise to $15 million for its last season. The industry is now waiting for the first $20 million per episode TV show, with Amazon’s Lord of the Rings being the front runner. The Premiership is in the same ball park at 13 million per game, when converted to US dollars. The numbers may be similar but the value is not comparable.

The shelf life of a big show is years, a football game shelf life is measured in days.

These big shows are being distributed and sold globally, the real value of the Premiership is for a UK audience. The Premiership rights are sold globally but these are different packages not the ones Sky and BT are paying for. The big shows are halo products used to enhanced the value of the overall content offering, though the same could be said of Premiership football for the sports packages offered by Sky and BT. BT didn’t just buy Premiership football when it launched BT Sport in 2013 it launched a comprehensive sports package. For an Internet Giant to bid for a meaningful Premiership package they would have to be doing this as part of a wider sports service. Amazon has picked up the rights to ATP tour tennis from 2018, so they are definitely making a move in this direction. This is thought to have cost £10 million a year, so nowhere near a Premier League sized investment, but certainly a toe in he water.

As of the third quarter 2017, just under 7.5 million homes subscribe to Netflix, if they are all paying £7.99 per month, the yearly revenue is £719 million. This does not have much capacity for UK specific sports rights, certainly not at the level Sky is paying. If an SVOD provider wanted to the enter the UK football market they would have to do this as an additional package not within their standard package, but it would take them a number of years to reach Sky Sports subscriber levels and loose some serious money while they did this.

Is ad funding an alternative? Some big football matches do make it on to Internet services. For the last two years BT have streamed the Europa and Champions League finals live on YouTube, mainly to meet BT’s free-to-view commitment to UEFA for the finals. In 2016 the reported audience on YouTube was three million. A big live premiership match current pulls in an audience size up to 1.7 million viewers on Sky Sports Premier League. From the latest available data I have access to, the Liverpool verses Tottenham match on Sunday 4th February had an audience of 1.39 million. Over time, free-to-view Premiere League delivered by YouTube of Facebook could reach a regular audience of three million.

At the top-end YouTube charges $0.30 per video viewed. If an internet video provider got this level, three million average viewers and sixteen ads for each game, they could cover the £9 million a game currently costs. But smaller audiences, a smaller ad load and a smaller ad fee would put unsubsidised games beyond reach.

The Premier League is going to push for the Internet Giants to bid for packages, to keep competition healthy from their perspective. But as long a Sky and BT are able to afford the current costs, their positions are unlikely to be threated unless one of the giants is prepared to make a multi-billion pound loss for the first few years of a deal.

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