Market Insight

Premier League offers more live matches in new TV rights package

December 15, 2014  | Subscribers Only

Tim Westcott Tim Westcott Director – Research and Analysis, Programming, IHS Markit

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The Premier League has published the tender for audiovisual rights for three years starting in 2016/2017, increasing the number of live matches to 168 from the current 154 per season. Press reports indicate that matches will be played and televised for the first time on Friday evenings, but the league will continue not to license matches played in the 'closed period' on Saturday afternoons kicking off 3pm.

Rights to live matches will be available in five packages of 24 matches and two packages of 14. There will also be a free-to-air highlights package, a near-live package of 212 matches available for linear and on-demand exploitation, and an internet-based clips package. Live and near-live packages will be available on a technology-neutral basis, said the league, which represents the 20 leading English football clubs

The process for UK rights in expected to be completed in February next year. No single buyer will be allowed to acquire rights to more than 126 of the 168 live matches.Under the current agreements, Sky holds the majority of the live rights, paying £760 million a season for the rights to 116 matches. Sky also holds the near-live rights package. BT is paying £246 million for the rights to 38 live games, while the BBC has the free-to-air rights and News Ltd has the internet clips package.

Our analysis

The increase in the number of live matches in the new contract partly meets the concerns of Virgin Media, which argued that the limited number of licensed live matches risked driving up the cost of rights and the consumer cost of sports packages. Virgin's complaint to Ofcom has now triggered an investigation by the regulator. Most other European leagues - such as Germany's Bundesliga and Italy's Serie A - televise all of their matches. The new Friday night matches - which are likely to be one of the two packages of 14 matches - will prove highly attractive to broadcasters, being played in weekday primetime. Live matches are selling for an average of £6.5 million each, implying an additional £91 million in revenue a season for the clubs.

The key issue in the new auction will its impact on the the balance of power between Sky and BT, and whether a new bidder will emerge. Last time around, the entrance of BT was a major surprise, but its gamble - which IHS Technology viewed mainly as a strategy to protect its leadership of the broadband market first, and the creation of a pay TV business second - has paid off. BT reported 7.473 million broadband subs at the end of Q3, up from 6.446 million at the end of Q3 2013 following the launch of BT Sport.

Since then, BT has reached further into the rights market by acquiring rights to the Champions League and Europa League from 2015/2016, paying £299 million a season. BT is expected to choose the start of that contract to increaee charges for the three-channel BT Sport service, which at the moment is offered for no extra charge to BT broadband subscribers. This would also mean that BT could also bid to take a larger slice of Premier League matches and may indeed be obliged to do so to make BT Sport viable as a pay TV service.

Sky is widely expected to have to bid more to maintain its position in  pay TV sports. The money is would have spent on its Champions League deal (believed to be £80 million a season) will be available, together with the £600 million it will receive from selling a majority stake in Sky Bet to CVC Capital partners. Sky could also dig further into its annual operating profit (£1.7 billion in its last financial year). The pay TV market leader will therefore have a considerable war chest as it seeks to main its hold over the league, which it has televised live every season since 1992.

Theere is no shortage of possible third party contenders - although Virgin Media has said that it is not interested in bidding for rights. Vodafone, which is planning to re-enter the UK fixed broadband market next year is one possibility.Discovery Communications - now the majority owner of Eurosport International - is another, although a move into high cost premium sports rights would be a departure from its current strategy. Qatar's Al Jazeera group would also be a candidate, though its European activities are currently limited to France, where it is believed to have paid no more than reserve prices for Ligue 1. Otherwise a wide range of internet players usually feature in speculative press reports whenever the Premier League rights come up for auction.

Geography
UK
Organization
BBC BT BT Group ITV Sky Sky TV
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