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.