First of all – wow!
I mean WOW!
£3bn for the new Premier League rights. A 71% increase on the 2010/11 – 2012/3 deal.
In the current economic climate, that has to be a spectacular result for the Premier League, and its clubs.
But I just wanted to address what it means for all the players, and what it might mean in twelve month’s time or even sooner.
Channels
Sky had to win rights to the majority of games. Its very foundation is built on the Premier League. It has to have a package that football fans see as unmissable. With its retention of the key 4pm package, it has pretty much done that. But it has lost some significant rights to BT.
The Premier League bundles its fixtures up into packages broadly based around when the games go out.
Under EU regulation, Sky would only have been allowed to bid for 116 of the 154 games on offer under the new deal (more than the current 138 games a season). Sky has successfully achieved that, although at significantly greater cost than last time around. It’s true that the current deal was broadly flat compared with the one before that, but they’ve made amends this time around.
The loss of the Saturday lunchtime games should not be underestimated though. Sky’s recent deal with the Football League will probably mean more Championship games will go out in that slot. But Sky will not be showing some of the biggest games of the season. And this is the first time since the inception of the Premier League that this can be said to be true.
BT is the new player in the market, and I don’t think anyone really saw them coming. We’d heard talk about Google and Apple – neither of whom I ever saw as realistic bidders since they work on global scales far more than a single territory like the UK. But there was also Al Jazeera in the mix.
If someone mentioned BT as a likely bidder, then I certainly didn’t see it reported.
Media Guardian’s report says that BT is paying £246m a season, or £738m overall for its package of 38 games a season. On a per-game basis, BT is paying more than Sky (with its other package broadly being midweek games). It clearly outbid Sky and all-comers for package “A” which constitutes the Saturday lunchtime selection of games. Critically, it gets 18 of the 40 “first picks” a season.
That means that BT will in all likelihood get a Manchester derby, a north London derby, and a Merseyside derby. Those Saturday lunchtime games are big games, especially if the clubs are due to play in the Champions’ League on a Tuesday night and the police dictate that it must be an early kick off.
The question is then – what will BT do with its games? How will a consumer be able to buy them?
BT obviously has its own platform in BT Vision. It could make its new packages exclusive to that platform meaning that only BT Vision subscribers could get all the games. And since BT Vision also offers Sky Sports 1 and 2 via an encrypted Freeview service, it might market itself as “the only place to get every Premier League game” or something similar.
But BT Vision has not been noticeably successful. Many of its subscribers get access to it as part of a larger package. And it’s not clear how much people are actually paying extra for it. Or indeed using it as their primary TV delivery mechanism.
BT is also notably a shareholder in the forthcoming YouView, shortly to begin fullscale beta trials. One would imagine that BT’s football offering will be made available via that platform. Sky could also its sports services that way.
There is a problem with HD though. Sky’s current unique selling point is that Sky HD is the only way to get all its sports in full HD. Sky Sports 1 and 2 via encrypted Freeview are only SD. And there isn’t really the Freeview capacity for a BT HD broadcast stream. BT could offer a streaming HD service, but that’s asking for all sorts of problems which much the UK’s broadband capacity really not up to it. With buffering, the radio might be minutes ahead of a streaming TV channel.
The other issue is that current Sky subscribers, via Sky Digital or Virgin Media, might just simply not be interested in another box. Although BT has a compelling offering, it’s not clear that this will persuade a die-hard football fan to place another box under their TV set. You only have to go back to the days of OnDigital when it had exclusive Champions’ League coverage to see that it wasn’t enough for fans to adopt a second platform if they already had Sky – at least not on a scale that gave OnDigital an ongoing business model.
And given the price BT has paid, it’s going to need some significant subscription numbers to make it pay, BT also needs the big prices that pubs pay for access.
Therefore I think BT will have to launch an HD channel with its games and put it on the Sky and Virgin Media platforms. They’ll lose potential subscribers otherwise.
ESPN is clearly the big loser here. They initially picked up the defunct Setanta’s rights, but with the current TV deal, lost one of the two packages it had previously had, leaving it with a single package of Saturday teatime games. Clearly ESPN’s UK management either wasn’t able to match other’s offerings, or perhaps more likely since they are essentially a Disney company, couldn’t make the figures add up at that prices being talked about.
But being a sports channel in the UK means starting and ending with football. As recently as last month ESPN was saying precisely that. And with no Premier League games from the start of the 2013/14 season, that has to raise questions over the whole enterprise. Will subscribers stay with them? They still own FA Cup rights until the end of 2013/14, but that leaves their final season with only FA Cup games as top-flight domestic football. Italian, Russian and German league football doesn’t really make up for that.
One way or another, they’re going to have to reduce subscription rates, or even adopt a model like Eurosport of being bundled in a sports pack via Sky and Virgin Media.
Al Jazeera was always the dark horse of this round of bidding, and you feel at the very least, they’ve caused everyone else to bid much more than they’d hoped – or perhaps are comfortable with. How serious they ever were is something I clearly don’t know. But they do have the financial muscle to buy the rights. But perhaps even they baulked at the prices that were being bid?
The BBC are probably the real winners here. They’ve retained Match of the Day rights, with some added online coverage – finally. And until it becomes clear where BT’s games are going to made available, there’s a strong chance that 10.15pm on a Saturday night will be the first time a lot of people will have had an opportunity to watch the weekend’s top game, pub’s aside.
Consumers
Ever since the EU ruled that a single company couldn’t own all the rights, it’s been clear that consumers always lose out. To see all the football – albeit more than ever before – consumers have to subscribe to at least two packages. And until we understand what’s going to happen with platforms, they may have to invest in a separate platform too.
A 71% increase in TV rights doesn’t come without a cost. And while the twenty clubs in the Premier League will be clinking champagne glasses this evening, I can only see that this will lead some significant “bumps” in subscription rates. Push them too high and
And it’s BT that stands to be at risk here. If Sky’s rates go up too much, then consumers will have to cut back elsewhere. And that probably means not taking up BT’s offer. BT will need to tread a fine line to come up with a compelling offering that still makes financial sense to them.
And everyone will have to keep on top of pirates. I suspect that there’ll be more illegal streaming of those Saturday lunchtime games than there is currently.
Let’s not forget, that while in the football world inflation is rampant, the rest of us are still gong through some tough times.
Media Outlets
Remember a couple of years ago when BT was first able to offer Sky Sports via BT Vision? And Virgin Media was pushing the football too? As was Sky? Well that meant a lot of cash was being spent persuading consumers to sign up across a lot of media. July and August 2013 will probably see more of the same.
So winners and loser all round. The key question now is how BT plans to make its rights available, and at what cost.
Comments
7 responses to “The Premier League’s £3bn Deal”
Hi Adam,
A few points really from me…
Consumers… is it a good/bad thing that they have to subscribe to multiple channels to view Premier League football? Well perhaps it is, but I am inclined to disagree it is a bad thing overall. That’s because over the past 20 years the number of football matches available has exploded. When I started paying an interest in television at the end of the 90s, Sky only had the rights to 80 matches per season. They’ll still have the rights to 3/4 of the matches under this new deal, so I don’t think anyone who avoids BT will be hard done by. And anyone who only wants the top picks will be well served by BT.
If BT are sensible with their picks they’ll be able to show the last game of the season decider (if there is one) under this deal.
Where will BT make money from this deal?
Commercial subscriptions is one area, and unlike ESPN/Setanta/ONdigital, BT do already have a large customer base of commercial subscribers to retail to. The other thing about BT compared to those that went before them is that they’ll be keen on ‘triple play’ and are hoping to cash in on broadband and telephone subscriptions on the back of this.
BT have confirmed they are retailing on others platforms, I beleive Sky will almost certainly be selling this channel in return for more/all of Sky’s channels for the BT Vision IPTV service.
The fact that BT bid for these rights doesn’t suprise me. They’ve been trying hard to establish themselves in the TV market place, and they have enough financial clout to do so. BT have retailed Sky Sports on DTT for nearly two years now. And don’t forget they have Top Up TV reselling those channels for them too. Is this interesting for YouView? Yes, but for BT it’s only a sideshow.
BT Vision have recently announced deals to stream the UKTV channels not carried on Freeview via their IPTV service, along with FX, National Geographic and Nat Geo Wild from Fox Internation. I bet this won’t be the last of such news in the build up to the 2013/14 season.
Ash,
If it were just a question of volume, then I’d say you’re right and there’s no need for consumers to go out and get the BT package because Sky delivers the volume. But the quality that BT has picked up means that many current football subscribers who haven’t felt it necessary to buy the ESPN package may well feel they need the BT package. ESPN never had the really big games, and BT will get many of them.
As you say, BT will produce a subscription channel, which I’m sure will be made available to Sky households. The quid pro quo will be BT Vision offering the full range of Sky Sports services.
Indeed BT has put up a presentation that almost explicitly says the former of this.
BT’s challenge is going to be delivering all those channels in acceptable quality to consumers on either its BT Vision product or the more generic YouView boxes. SD won’t be a problem, but I believe that HD will be unless you’re in a fibre area and have moved over to their Infinity product. It’s very understood that different parts of the country have very different capacities for Broadband. I know that those areas receiving fibre will undoubtedly get excellent coverage. BT is talking about “levaraging fibre and interactivity”. Quite what that means in English, I’m uncertain.
Unfortunately, I don’t believe that this is big enough to steer many of the current 10m subscribers away from Sky’s TV platform to BT’s. They can offer triple play and in fibred areas, have some significant advantages over Sky. But Sky’s the incumbant here.
Sky will hammer the fact that they offer games in HD. That’s the problem that BT Vision – and TopUp TV (do they even still carry out any marketing?) – now face.
However, this still won’t be a great deal for consumers since an overall 70% cost increase has to be paid for by someone somewhere. And that’s the end subscriber. ESPN currently costs a Sky subscriber £9 a month in addition to their Sky subscription. BT will need 2m subscribers paying an average of £10 a month across the year (including the summer) just to wipe their faces. That’s before production costs, hardware subsidies and marketing. I don’t know how well ESPN is doing for subscribers. Previously they had a deal with Virgin Media to bundle it, but it’s now an £8 a month option on Virgin Media. And will BT only be offering their Premier League football package? Or will they now acquire other rights? Prices will have to go up.
The EU only regulated the previous set of rights. This time,the rights are not regulated by the EU, so the Premier League could have sold all matches to BSkyB.
However, they decided to prevent any one broadcaster from getting more than 116 matches.
I don’t believe that’s true. Certainly press reports have stated that Sky was only able to bid for 116 of the games offered due to EU Law.
The EU’s Competition Commission has reached settlements with a number of European football associations over the sale of their rights.
In particular, here is the agreemenet with the Premier League from 2004.
In particular:
2007 onwards
24. Beginning with the rights for the 2007 season, the FAPL will specify that no single buyer is able to acquire exclusively all of the centrally marketed live rights packages: the packages will continue to be balanced, reflecting prevailing market conditions and taking into account the requirements of broadcasters and the object of showcasing the Premier League competition.
25. The FAPL and the Commission will jointly commission an independent economic study to evaluate, in the context of the market situation in the United kingdom, the parameters within which a variable financial bid for a package of live rights (i.e. a bid whose financial terms varies depending on what other packages of rights are also awarded) by a dominant bidder may be justified by reference to the economic and commercial value of the relevant rights packages to the bidder in question.
Given that there were seven TV packages available – five of 26 games and two of 12 games – it was perhaps the Premier League’s decision that at least one of the 26 game packages and one of the 12 game packages needed to be sold to a non-dominant bidder (i.e. BSkyB).
But as I understand, this EU regulation still stands, and it’s down to the Premier League to work out how to abide with it.
Adam,
You do make some interesting observations in reply to my comment. The thing is, for now, it is too early to tell what is going to happen one way or the other. We’ll find out in the fullness of time.
Content is king. People aren’t going to refuse to watch Man Utd vs Man City just because it isn’t available in HD. Although it might affect the amount you can charge for it.
Plus we don’t know who will get the 5th HD slot on the PSB3 multiplex in September – BT might well be a bidder for that. If they are paying over £6m per match, it is possible to beleive they might get lucky with capacity for HD on DTT too. And even if BT don’t, longer term, it may be possible for BT to be lucky with one of the new DTT muxes that will be coming along, for which they could offer their HD content on.
You’re absolutely right that until BT firm up their plans, and get into the necessary negotiations with others, we don’t know how they’ll deliver their rights.
And of course there is that DTT space. Although it would seem to be an enormous cost for just a couple of football matches a week. (OK – so they’d use it for other “on demand-ish” programming at othertimes as Sky essentially does with Sky Anytime).
Not being able to offer games to large numbers of people would be a seriously retrograde step though.
I wanted to thank you for this fantastic read!! I certainly enjoyed every little bit of it.
I have got you saved as a favorite to look
at new stuff you post