Market Insight

Swisscom becomes majority shareholder of premium rights owner Cinetrade

May 01, 2013

Martyn Hannant Martyn Hannant Manager – Research and Analysis, Service Providers & Platforms

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Swiss IPTV operator Swisscom has increased its stake in premium content owner CT Cinetrade ('Cinetrade') from 49 per cent to 75 per cent. Cinetrade is the major shareholder of Switzerland's key premium content distributor Teleclub, which currently holds major sports rights in Switzerland. Teleclub holds Swiss Super League football rights through a five year deal worth SFr140m (€113.5m), which it renewed in 2012, and also owns Champions League and Europa League rights until 2015. Terms of the deal were not disclosed. The assumption of the majority stake was pre-approved by the Swiss Competition Commission COMCO at the time that Swisscom took its initial stake. Nonetheless, Swisscom and Cinetrade are under the regulatory spotlight in Switzerland, following the announcement of an investigation by COMCO into the field of live sports. The investigation centres on marketing and distribution of Teleclub sports content.

Cable association Swisscable has launched a scathing attack on the deal claiming that it highlights the importance of the competition commission investigation into distribution of sports rights. The COMCO investigation focuses on the availability and pricing of sports content on Swisscom's platform compared to its competitors. Currently for Swisscom subscribers, the incremental price of the Teleclub Sport package is SFr12.90 (€10.46) a month for up to thirty two channels worth of sports content. By contrast, the rates through cable operators and IPTV provider Sunrise TV stand at SFr9.90 (€8.03) a month for a sports package consisting of three channels. The regulator will investigate any influence of Swisscom's holding of the sports content.

Swisscom has enjoyed sustained subscriber growth since its inception in 2006, and had 832,000 residential TV customers at end of first quarter 2013. The IPTV operator has been the market leader in digital TV subscription since third quarter 2011. Its biggest competitor, cable operator UPC Cablecom, reported a digital subscriber base of 606,000 at the end of 2012, and in November 2012 announced it was dropping encryption on its basic digital offering.

The investigation mirrors developments in the UK, where regulator Ofcom imposed a wholesale price on BSkyB's sports channels. Outcome of the Swiss regulator's decision is unlikely to be known for at least another 18 months.

 

Organization
Cinetrade Swisscom Teleclub
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