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Premier League plays it long on overseas TV rights

The Premier League’s media sales team have been totting up the bids from almost 40 different territories for overseas broadcasting rights, increasingly key to the Premier League business model. The first round of the European rights auction closed the day after the group stage finished at the Euros, with bids from 23 territories due on Thursday, June 24.

What these bidders were bidding for, how their bids must be presented and what obligations they would have to meet before getting any rights is all explained in the league’s 73-page invitation to tender. This is the manual for the Premier League’s business model, and it tells you where the league believes its business is heading.

For the first time, the league has asked all bidders to submit two bids for the packages in their territories, one for the customary three-year cycle and another covering six years.

Most incumbent broadcasters have wanted longer deals for years, as they believe they can build audiences more effectively if they are given the time and security to do so. The three-year cycle was brought in after pressure from the European Union’s competition watchdogs, which wanted to ensure that new entrants were not locked out, depriving customers of choice.

“Six-year terms are a defensive move against a cooling international market,” explains Brussels-based media rights expert Pierre Maes. “In the current cycle, international rights compensated for a 10 per cent domestic decline but the decrease of the international rights will be significant in 2022-25.

“Half of the 35 per cent increase in international rights this cycle was due to sterling’s fall after Brexit and the growth was dependent on just five markets: China, with PPTV paying £161 million per season; sub-Saharan Africa, with SuperSport at £168 million a season; the US, with NBC at £144 million; MENA (the Middle East and North Africa), with beIN at £112 million a season; and France, with Canal+ at about £79 million a season.

 “Rollovers (abroad) will be a good result but the Premier League would have expected growth before. The strategy is, ‘Let’s go first where the money is’ — a big spender like NENT or a market with competition — then go to big markets where they can stay at the same level — MENA and sub-Saharan Africa — and then, eventually, do the more difficult markets with a classic tender process.”

Piracy is an ongoing problem that is showing no signs of easing up and will only continue to proliferate with further fragmentation or price rises.” The Premier League’s stance on piracy is one of the reasons its rights have held up better than most.

The rollovers the Premier League has already struck — a deal for Germany, Austria and Switzerland with Sky Deutschland, sub-Saharan Africa with SuperSport, MENA with beIN and the British deals — suggest broadcasters do still see English football as a premium product.

“The Premier League is the most popular league outside its own domestic market,” says Jack Genovese, a senior analyst at Ampere Analysis.

“On average, it is about 1.5 times as popular as La Liga and twice as popular as Serie A in European markets other than Spain and Italy, respectively.  But the hyper-inflation in rights witnessed in the second half of the past decade has largely come to an end. Traditional pay-TV businesses must contain their content costs. The sports-rights market is experiencing a period of stagnation, which may turn into deflation should current trends accelerate.”

“So, it makes sense for the Premier League to seek to enter into long-term deals at this stage, thus meeting demand when high, and at the same time securing stability in its international media revenue stream.”

Analysts do not believe this will be the cycle when the international rights top the domestic ones. “There are strong indications the Premier League can continue to grow internationally, as the strategic value of its rights increases in many markets,” says Genovese.

“But to surpass the value of domestic rights, they would have to grow by more than 20 per cent per season. Two markets, in particular, will be decisive to understand whether that milestone will be reached: the US, where the rights are currently held by NBC, and China, where the previous licensee returned the rights after facing financial difficulties.

“The Premier League is indicating it could be willing to trade off some of the short-term value by going for the stability of long-term deals. Therefore, we think it’s likely that the revenue generated through international rights will increase over the next cycle but it may still not generate enough to overtake the revenues generated from UK broadcasters.”

Much depends, then, on just how much CBS or ESPN want to take those US rights off NBC, and whether China’s burgeoning middle class still think the Premier League offers good value.

 

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