Key contemporary trends in the UK sports media rights market (2017/18) - A view from industry
Published 03 May 2018 By: Alex Slade
This article explores some of the more significant activity in the sports media rights market for 2017/18 from the perspective of industry. Specifically, it looks at:
The functioning and results of a few of the bigger rights auctions;
A brief debate around what is happening in the OTT (over-the-top) sphere;
An update on moves to combat piracy;
A note on the recently announced distribution deal between Sky and BT Sport; and
A look ahead to 2018
UK major rights to market
2017 saw a flurry of sports rights coming to market throughout the year which is not particularly newsworthy in itself, but what was noticeable was the number of major, “Tier 1” rights that were released. Each of the tenders contained amended rights from those that are available under the current cycles, with varying degrees of complexity in those differences.
The first of the major rights to come to market were the UEFA Champions League and UEFA Europa League rights for the 2018/19-2020/21 seasons, tendered in January. BT Sport acquired these rights exclusively for a reported £1.18bn1, a 30% increase on the fees they currently pay. A significant difference in this cycle is the way that UEFA will require BT to transmit some games on social media platforms rather than on a free to air/free to view basis via traditional TV platforms. BT made the value of this sort of exposure very clear to UEFA in its successful exploitation of the UEFA Champions League and UEFA Europa League finals in May 2016 (and again in 2017) on YouTube. This exposure was simulcast alongside the transmission of the matches on BT’s free TV channel BT Sport Showcase but it was the social media exposure that garnered the most viewing2. No other traditional free TV obligations exist in this next cycle.
In April, the premier pan-European rugby competitions, the European Rugby Champions Cup and the European Rugby Challenge Cup, were brought to market by European Professional Club Rugby (EPCR) for the 2018/19-2021/22 seasons. Currently the matches are broadcast in roughly equal share between Sky Sports and BT Sport, but EPCR abandoned this approach and awarded the new pay TV rights3 exclusively to BT Sport. A free to air package of rights was withheld by EPCR in order to satisfy their ambition for greater reach than one pay subscription broadcaster could offer. What has been surmised, but unconfirmed, is that the move from two pay broadcasters to one lead to a drop in rights fee4. The question that this raised is whether the rampant inflation in the value of major sports rights in the UK might have hit a high point and might be slowing down or dropping. However, any such suggestions were refuted in the next two sets of rights that were awarded.
Both the England & Wales Cricket Board (ECB) and the English Football League (EFL) came to market in June with new propositions.
The ECB sought bids for pay TV, free to air TV, digital, radio and international rights for 2020-2024. A significant change in approach from previous cycles was the ECB’s insistence on free to air exposure with a dedicated free to air pack. This pack was won by the BBC5, and is significant because there have been no free to air transmissions of live England home international cricket in the UK since 2006. A further point of interest was that the tender included rights to the ECB’s proposed new franchise-based T20 competition. The fact that details of this competition were, and remain at time of printing, to be agreed shows that a significant leap of faith was required by the bidders to ascribe a value to the rights. In any event, Sky’s current £75m per annum rights fee has been dwarfed by the combined £220m per annum fee that these new rights achieved.6 However, despite the significant uplift in fees, the ECB’s decision to withhold some exclusivity from the pay TV licensee, in order to ensure free to air terrestrial broadcast, may have diminished the return that could have been made. Even higher fees could have been achieved had the rights been licensed on an entirely exclusive basis. However, the additional eyeballs and the increased reach was clearly highly valued in the ECB’s considerations, even if it does seem to buck the trend that almost all premium sport in the UK is to be found on pay TV channels only.
At a similar time, the EFL came to market with its expanded rights packages from 2019/20 for the three divisions below Premier League in England. Optionality was provided with 3-year and 5-year offers being welcomed7. The number of matches on offer was significantly increased to 324 a year, from the 112 currently broadcast. Again, the rights fees climbed a significant amount, reportedly 36% year-on-year, to around £600m for the five years that Sky acquired.
The Indian Premier League rights came back to market in 2017, having been withdrawn at the end of 2016 after the High Court of India’s intervention8 in the process. Following the administration committee’s review of BCCI reforms and the IPL tender documents (as recommended by the Justice RM Lodha Committee) the auction process was reopened in India in February and then in the UK in August. Star India eventually won the global media9 rights for $2.55bn. The five year deal, from 2018 to 2022, represents an increase of 558% from Sony Pictures’ previous deal. Sky subsequently acquired the UK rights in January 2018.
The final flourish in the 2017 UK rights market was the release of the Premier League’s ITT (invitation to tender) for the 2019/20-2021/22 seasons. As with the EFL, although not to the same extent, the number of games on offer has increased from 168 to 200 a year, split between seven different packs. The appetite for more live content on TV is clearly still in the ascendancy. The single buyer rule remains, as was expected from the premium sports rights in the English market. Bids were submitted on 9th February 2018 amongst great speculation about the fees that broadcasters might pay and possible new entrants from the technology world to compete with the incumbent broadcasters Sky and BT10.
The current trends in OTT services
There was clearly a lot of commotion in the UK with major rights being swept up by traditional broadcasters. There was also a significant amount of rights activity in the UK, and around the world, focusing on OTT (over-the-top) offerings. It has long been argued that viewers are turning away from traditional broadcasting in favour of their portable devices and that OTT and App-only offerings will be the death of the “old guard” TV broadcasters. Whilst it is clear that OTT and digital offerings are increasingly important to rights holders for a number of reasons, there seems to be little, if any, conclusive evidence that traditional TV offerings are doomed. A quick scan of the previous section of this article shows the rude health and ongoing ambition of the traditional TV broadcasters and should be enough to cause the doubters to rethink.
Some trends have appeared with respect to OTT offerings. The first is that a number of rights holders seem to be taking advantage of the ease with which they can offer direct-to-consumer (DTC) opportunities. The proliferation of mobile devices, the improvements in screen resolution and the ubiquity of high-speed internet connections on the go, all contribute to this. The Women’s Tennis Association, English Football League, European Handball Federation, FINA, World Wrestling Entertainment, Ultimate Fighting Championship and All England Lawn Tennis and Croquet Club, to name but a few, all now offer DTC propositions. The National Football League’s (NFL) revamped Game Pass enables fans to watch every NFL game live or on demand. These offerings tend to run in parallel with TV broadcast deals, but with varying holdbacks and nuances to who gets to exploit which elements of the rights.
A second group of rights holders are partnering with tech companies to ensure their sports achieve the exposure that they might not be able to realise through the traditional route of TV broadcasting. There are huge benefits in following this route for the smaller and less established rights holders through simply building of exposure and engagement. The World Surfing League (WSL)11 and Pro Fighters League12 concluded deals with facebook for streaming of their content, proving that the more niche audiences can be well served. Surfing is notoriously difficult to schedule, being so weather dependent. Facebook offers the WSL fans the required flexibility that linear broadcasting cannot, including a real-time notification service to ensure that they never miss an event.
The third trend is that of the digital companies themselves obtaining rights. Amazon acquired rights to the ATP World Tour, Next Gen Finals13, the Pro Volleyball tour14 and NFL Thursday night football. Nevertheless there are clearly some challenges and learnings for relative newcomers to the market. In late 2017, Amazon Prime’s 1st live NFL game only drew 400,000 viewers, for an average of 55 minutes (which compares to the 14.6m who tuned in on CBS). However, 1.6 million Prime viewers did tune in at some point15. It is difficult to be sure whether this particular case shows an issue of non-exclusivity, with viewers simply turning to the TV channel that they always watch the game on, unaware of the Amazon option. Can we really read in too much to this when there are multiple means to view? Nevertheless, there is clear potential for Amazon with its market of 80 million Prime subscribers. The question, of how to realise this potential, is surely a hot topic for Amazon.
One of the clearest signals that digital operators are serious about the acquisition of sports rights was Facebook’s $600m bid for streaming rights in India for the IPL16. This clear statement of intent, that premium sports rights are now squarely being targeted, is perhaps what is stoking the rumours that Amazon is to seek to acquire Premier League rights in the UK.
Traditional broadcasters do seem to be meeting the challenges posed by DTC offerings and tech company partnerships. Increasing amounts of content are being streamed online, usually on a simulcast basis with the linear TV broadcast, via the broadcasters own Apps, websites and social media pages. Occasional live matches and increasing amounts of studio programming, interest pieces, discussion forums and the like are being shared via broadcasters’ social media pages and online offerings. As is frequently the case, it hasn’t taken long before the established players in the market recognised and addressed the threat from the fast moving smaller, or less established, players.
The oft-reported imminent demise of traditional broadcasting in the face of OTT and social media threats seems not too imminent after all. Broadcasters provide OTT services, they invest and engage heavily in their social media presence and frequently operate happily alongside OTT offerings provided by rights holders or standalone OTT providers. PwC’s “I Stream, You Stream” report revealed the ongoing hold and power of live sports as 82% of sports fans would end or trim their Pay TV subscription if they no longer needed it to access live sports17. The fact that the vast bulk of live sports is still only available via pay TV, shows that pay TV is not going anywhere soon. The choice of what to watch and where to watch it is a key driver in the increase in OTT, but the simple fact is that people don’t want to have to hunt around for the content through multiple offerings. 75% of consumers say they “can’t handle using more than four services in addition to pay TV”18. This poses a challenge for the “other” services – how do they ensure that they are one of the four?
Piracy and blocking orders
Piracy remains a key consideration for all sports distributors, whether pay or free TV, OTT or social media. It is clear that advances in technology have enabled the pirates to more readily stream others’ content and that the ease of distribution and access has mean that even relative technophobes can find those streams without significant effort. In response, both rights holders and enforcement bodies are taking an increasingly proactive stance to stop such activity.
In March, the Premier League was awarded a temporary injunction under which the bigger Internet Service Providers (ISPs) in the UK were required to block access to a number of servers associated with the illegal streaming of live Premier League matches. Those blocks continued for the remainder of the 2016/17 season. The success of the order, both in terms of the number of illegal streams that were blocked and the minimised risk of over-blocking (principally because the ISPs could only block for the duration of the matches and not indefinitely), led to an almost identical injunction being awarded for the duration of the 2017/18 season.
In December, UEFA were also awarded a blocking order in respect of its UEFA Champions League and UEFA Europa League matches in the UK19. This is a stand-alone order, and not linked to the Premier League’s order, although there are clearly very close similarities. The order bites on the same ISPs and follows a similar pattern of blocking against a confidential list of named servers.
Direct court action has also been taken by various rights holders with the Premier League again leading the charge. In February, three suppliers of pre-loaded IPTV boxes (that facilitate mass piracy of Premier League football broadcasts) were ordered to pay a combined total of £267,000 for copyright infringement. The order also blocked any further sales of such boxes20.
Inevitably, discussion about the root causes of piracy comes round to the cost of subscribing to pay TV services. It is clear that enforcement action alone is unlikely to fully counter the problem. Operators are constantly seeking ways to encourage new subscriptions at a price that is not prohibitive. Sky Sports took the decision in July21 to relaunch their channels, with Premier League, golf, cricket and Formula 1 benefitting from their own dedicated pay channels with the remaining channels covering other sports offered on a pay and free basis. Customers have a much greater ability to pick and choose from the sports they care most about, and as a result could face a significantly reduced bill at the end of each month. This is in addition to Sky Sports Mix which is a free channel showing live sports content as well as magazine shows and other curated content. Whether these efforts will have an appreciable effect on piracy remains to be seen, but any way that the barriers to legitimate entry can be lowered must surely be positive in the fight against piracy.
Sky were not the only ones launching new free channels. The FreeSports TV channel was also launched in August22 promising to show live football, rugby league, motorsport, ice hockey and more. FreeSports is the sister channel of Premier Sports, a pay TV channel and is another sign that linear TV is still seen as a strong and stable proposition.
An end to hostilities?
BT TV customers will be able to subscribe to content made available via Sky’s Now TV platform, which includes the suite of Sky Sports channels. BT will also be able to sell Now TV subscription passes directly to its own customers. On the flip side, Sky will be able to sell the BT Sport channels directly to its satellite customers. This distribution arrangement is anticipated to launch in early 201924. This could mean that there is less rivalry for viewers between the two networks. While both are undoubtedly going to continue to compete for sports rights, the jeopardy for not acquiring or not holding onto rights may be relieved a little if the platforms can still show that content. But, to a theme discussed earlier, this does not necessarily combat the threat posed by third parties.
Looking forward to 2018
The results of the Premier League auction were announced in mid-February25.Despite the fact that the two midweek & Bank Holiday packs remained unallocated, BT Sport and Sky maintained the status quo with very similar numbers of games. The much talked about threat from the tech giants did not materialise, at least not for the more significant weekend fixtures. The main topic of conversation was a slight drop in per-match fee that these broadcasters will pay. The vast, 70% increase in fees that the 2015 auction achieved26 were not repeated and indeed the fees actually fell. The £4.4bn fees fell short of the £5.1bn that the Premier League raised in 2015 and it is unlikely that the remaining two packs will make up that shortfall. However the Premier League remained bullish that the international rights, that they would take to market following the UK process, would more than compensate.
Having had such a bumper year of major rights in the UK, 2018 may well be characterised by quieter consolidation of existing positions with perhaps a wider range of lesser rights and a wider range of licensees acquiring such rights. The depreciation in fees felt by the Premier League in their UK auction is likely to send a strong message across the market that the fees bubble may well have finally burst.
The views expressed in this section are the author’s own.
This is an extract from the Media Rights chapter of the LawInSport and BASL Sports Law Yearbook 2017/18. To obtain a full copy of the Yearbook, which contains 10 chapters and over 50 articles like this from the industry’s leading sports lawyers, please visit our website: https://sportslawyearbook.uk/
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- Tags: Broadcasting | Cricket | England & Wales Cricket Board (ECB) | English Football League (EFL) | European Professional Club Rugby (EPCR) | European Rugby Challenge Cup | Football | Indian Premier League | Media Rights | OOT | Premier League | Rugby | The FA | The Football Association (FA) | UEFA Champions League | Union of European Football Associations (UEFA) | United Kingdom (UK)
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Alex Slade is VP Legal, EMEA at Aser Media, the owner of the Eleven Sports Network. Alex covers all areas of the business but his primary focus is the Eleven Sports channels and offerings in EMEA and the US. That work encompasses rights acquisition, licensing, distribution and carriage of sports rights for the Eleven Sports Network.
In addition, he is also an Independent Non-Executive Director of the British Judo Association.
Prior to Eleven Sports he worked for BT Sport as Head of Legal, Sport having joined just before the launch of the channels and before that for he worked in kids TV at Nickelodeon. Outside interests include cycling and sailing - Alex spent a year out competing in the Clipper Round the World Yacht Race in 2005-06. Alex lives with his wife and three daughters in Suffolk.