A cagey game for sports rights

A cagey game for sports rights

Monday, 8th March 2021
India vs England second Test, 2021 (Credit: BCCI/Pankaj Nangia)
India vs England second Test, 2021 (Credit: BCCI/Pankaj Nangia)
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As cricket returns to free-to-air TV, Matthew Bell checks out the bidders eyeing other top sports rights

The topsy-turvy Test series in India is bringing much-needed entertainment – though, latterly, little cheer for England fans – during lockdown. When time is hard to fill, what could be better than six hours plus of cricket a day shown on free-to-air TV.

There were many raised eyebrows when Channel 4 bought the rights to the four-Test series. Why would a channel that prides itself on risk-­taking and a young demographic clear its morning schedules for a game with an elderly and declining fan base?

In fact, restoring live Test cricket to terrestrial TV has proved a ratings hit. Nearly 6 million viewers watched England’s progress to a thumping win in the first Test, with many tuning in, bleary-eyed, from the very first ball at 4:00am. And not all the viewers were oldies: across the five days, 10% were under 16 and 13% aged 16 to 34. It’s a pity for Channel 4 that England couldn’t drag out their defeat any longer than two days in the third Test.

But was Channel 4’s coup an isolated triumph or are there more opportunities for terrestrial TV to pick up sports rights?“This is a bit of a one-off,” reckons Enders Analysis senior TV analyst Julian Aquilina. Sky Sports, which holds the rights for England’s home Tests until 2024, remains cricket’s dominant broadcaster. “A free-to-air broadcaster got its hands on the rights because pay-TV broadcasters didn’t think they were that valuable,” he suggests.

“Sky has learnt that it isn’t necessary to have everything – it can hang on to pretty much all its sports subscribers as long as it has, by some distance, the best sports proposition in the market,” says former Sky COO Mike Darcey. “If you’re a sports fan, you get Sky first and then ask if you need anything else. That’s why Sky is quite happy to step away from England Test matches in India. Is anyone going to churn? No.”

‘BT and Sky’s overarching strategy… is to cut back on their sports-rights spend’

Illustrating Darcey’s point, at the end of last month, Sky snapped up the rights to the T20 internationals and the one-day series, which follow the Test series. Short-form cricket puts more bums on sofas – Sky wasn’t going to allow these valuable rights to fall into the lap of a free-to-air broadcaster.

Sports without the mass appeal of football, such as cricket, face a tricky choice: greater exposure on terrestrial TV but less money; or bigger bucks but smaller pay-TV audiences.

Sky’s cricket coverage has been exemplary and has filled cricket’s ­coffers, but it has come at a cost –the game’s grassroots have withered.

Talking at an RTS event late last year, Sunset+Vine Chair Jeff Foulser, whose company produced Channel 4’s coverage of the 2005 Ashes – the last time live Test cricket aired on terrestrial TV before now – said: “This is no criticism of Sky, but not everyone can afford to have a subscription. Cricket has suffered in the intervening years because it wasn’t available to as many eyeballs as possible. All sport needs terrestrial television.”

Cricket is trying to recalibrate its coverage: Sky will continue to broadcast home Tests, but the BBC has highlights packages and will show some live T20 internationals.

Manchester City’s Ilkay Gündoğan during the English Premier League
Liverpool vs Manchester City match on 7 February 2021. (credit: AFP)

Football is a different matter. Premier League rights are up for grabs again and, outside the highlights package, cash-strapped free-to-air TV again won’t get a look in. The last auction, in 2018, saw domestic rights sell for £4.5bn over three years – a fall from 2015’s peak of £5.1bn – to Sky as the major broadcaster; BT Sport as the second player; and Amazon, the junior partner.

The years of galloping inflation that saw rights rise from £1.8bn in 2009 to £3bn in 2012 are over. If recent deals in major European leagues are any guide, the current bidding for UK rights for the Premier League will not reach the 2018 figure.

Last year, Germany’s Bundesliga domestic TV rights fell by almost 5%, while France’s Ligue 1’s deal with Barcelona-based media group Mediapro collapsed. It has recently signed a stopgap deal with Canal+, but it is thought that the French league will lose close to 50% of its TV income this season.

For the Premier League, UK rights will probably go down 5% to 8%, “but it wouldn’t surprise us if it was 10%”, says Alexios Dimitropoulos, a senior analyst at Ampere Analysis.

Auctions need aggressive bidders and, since Sky and BT ended their long-running dispute over carrying each other’s channels in 2017, competition has been lacking. “The only real competitive pressure there’s been in the market for some time has been Sky versus BT and that has gone because of the cross-supply deal,” says Darcey. “That’s why the prices went down last time. They’re both content with what they’ve got and they will both see an opportunity to bank a saving.” 

Aquilina adds: “Sky and BT already have very expensive sports portfolios. The overarching strategy at these two companies is to cut back on their sports-rights spend.”

Will any new bidders enter the auction? The consensus is that Amazon will be content to stick with its current package of 20 live games bookending Christmas, which has encouraged soccer fans to join Amazon Prime.

Says Darcey: “It’s a minor package, which happens to work for Amazon very well. It’s a very big leap from there to contesting the major packs
of Sky and BT. There’s not zero chance of that, but it’s quite a low chance. And the chances of anyone else seem lower still. The likes of Netflix and Apple haven’t shown any signs of getting serious about sport.”

Aquilina says that even a fall of 10% to 15% in the price of Premier League rights “would not be surprising”, adding: “Sport is not a good fit for most streamers. Netflix and Disney are video entertainment platforms in the UK… sports rights have limited or even zero shelf lives – people want to watch the game live, whereas scripted drama can be watched over and over again.

“Sports rights typically also get sold to a domestic market and that doesn’t play to the advantages of these global players.”

There has been speculation that fast-rising sports streamer DAZN could bid, but nothing can happen until the Premier League issues its tender document which, in years past, would have been released by now.

Premier League CEO Richard Masters recently said: “We are in no rush.… It is too early to say whether there will be any material deviation from our historic packaging strategies.”

Darcey thinks the Premier League could change the packaging structure to “try to tempt in another player or generally disrupt the sale of the rights. At the every least, you want uncertainty – if bidders are uncertain what’s going on, they sometimes manage their fear by putting more money on the table.”

England vs Wales, Six Nations rugby union, February 2021 
(credit: Welsh Rugby Union)

Rugby union’s Six Nations rights are also due for renewal. Never has sport had a more captive audience than during lockdown – the England vs Scotland clash on ITV (which shares coverage with the BBC) recorded a peak audience of 8.7 million last month, the biggest in more than a decade for the Calcutta Cup.

Unfortunately for union fans, the Six Nations is not a category-A listed event. This guarantees that certain high-profile sports events, including the finals of the FA Cup and Wimbledon, are available on free-to-air TV.

Worse, to dig itself out of a Covid-19 financial hole, the Six Nations is set to sell private equity firm CVC Capital a 14.5% stake in its commercial rights. Dimitropoulos reckons that CVC will want “to push for higher TV revenues and that would mean it’s very likely to go partly behind a paywall. My feeling is that this will be part paywall, part free-to-air.”

During CVC’s involvement with Formula One, from 2006 to 2017, coverage moved to pay-TV and income was maximised, but many fans felt this was at the expense of the sport’s soul.

Since CVC sold F1 to Liberty Media for $4.4bn, more than doubling its investment, it has acquired stakes in two rugby competitions, the English Premiership and Celtic Pro14. Football could be next, with CVC currently negotiating for a stake in Italian league Serie A’s media rights.

Banker and sports specialist Keith Harris, speaking at a SportBusiness webinar last month, said: “If it could be done in Formula One, it could be done in another money-spinning sport, which is obviously football.”

With football leagues around Europe increasingly anxious about a decline in TV revenues, will they, too, turn to private equity money to plug the gap? And will this lead then to even greater commercialisation of the people’s game?

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