Market Insight

Mediapro lands Serie A rights after long and difficult process

February 06, 2018

Matteo Marchello Matteo Marchello Senior Research Analyst – Channels, Programming, IHS Markit

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Italy’s Lega Calcio has awarded rights to Serie A for the 2018-2021 period to Mediapro. The Catalan company was the only bidder for the rights to the football league championship, agreeing to pay €1.05 billion ($1.3 billion) per season—just above the Lega’s asking-price. Mediapro will either sell the rights on—they are currently held by Sky and Mediaset—or could set up a channel on behalf of the Lega.

Yesterday’s award marks the ended of a lengthy process that began on 26 May last year, when the first call for bids was released. In this document, the Lega Calcio Serie A split the 20 teams taking part in the tournament into two groups: the first pool contained eight teams, the four with the largest audience, the three teams promoted from Serie B and the one with the smallest audience; the other pool would include the remaining 12 teams.

The rights were allocated into a set of packages: A, B and C1/C2 that would include all the games played by the eight teams in the first pool on the basis of platform exclusivity (A being satellite, B digital terrestrial, C online, IPTV, and mobile), while the remaining Package D would include the rights to broadcast every game played by the remaining 12 teams on any platform. This package was designed to stimulate competition and incentivise new operators to bid as the rights in this package would not be platform-specific.

The minimum price for each package was designed by the league to gain at least €1 billion per season (up from the current €966 million) from the domestic rights. The outcome of this call for tender was unsatisfactory for the Lega, as Mediaset Premium decided not to make any offer for Packages B or D. Sky bid €230m and €210 million for Packages A and D respectively. It has been reported also that Perform placed a bid of €100 millions for packages C1 and C2 - about half of the miminum amount decided by the Lega.

The total revenues did not meet the amount requested (it was slightly more than half of the amout requested) and several packages remained unsold; therefore the Lega decided to design another call for bids to be launched six months later.

In January, the Lega released a new tender with the packages modified and with another document stating the conditions for the sale to the rights of every single game in Serie A to one independent intermediary, in case the primary call for bids did not bring an outcome satisfactory enough. The deadlines for the two documents were set up on different date to make effective the call for bids for intermediaries only if the outcome of the auction was not satisfactory to the Lega. It is worth mentioning that in the call for bids for intermediaries the rights would be not be divided into packages, with the reserve price set at €1.05 billion.

As it happened in June, the January call for bids directed to broadcasters did not give the desirable outcome for the Lega (no details have been released about whether Sky or Mediaset lodged bids). The Lega proceeded to open the call for bids from independent intermediaries. MediaPro was the only operator interested in the rights and offered an amount of €950 million. The official bid, made on Friday 26 January was initially rejected but it was left room for bilateral negotiation between the Spanish company and the Lega Serie A. After the negotiation, Mediapro increased its offer, reaching the amount the Lega was aiming for.

Our analysis

Despite the formal conclusion of the allocation process, the final landscape seems to be far from its ultimate definition as the use that Mediapro can make of the rights is not clear yet. In fact, the document designed for the intermediaries specified clearly that the winner would not be entitled to broadcast the games itself.

Mediapro’s offer has been accepted on the basis of the Spanish company being solely an ‘independent intermediary’ meaning that it is not allowed to run its channel or broadcast the games directly. At the moment, rumours about a platform set up by Mediapro but run officially by the Lega have already begun to spread but whether this strategy fulfils the legal requirements of the call for bids or not is still unclear. Sky has immediately announced that it will appeal against this decision to the Italian regulator and authority for the communication industries (AGCOM), which has six weeks to validate the outcome of the call for bids.

Sky, in fact, has little to gain and a lot to lose from this scenario. The offers submitted, as well as the past strategies, prove that domestic football is a pivotal asset for Sky’s strategies in the Italian market. Serie A games have always been part of Sky’s premium bouquet of channels, and is one of the main drivers of its subscription business. To obtain the position of market leader, Sky paid €1.150 billion, €1.680 billion and €1.989 billion for the last three cycles of Serie A rights respectively in 2010-12, 2012-15 and 2015-18.

It is harder to interpret Mediaset Premium’s strategies at the moment. The operator owned by Mediaset, in fact, has recently lost the TV rights to broadcast Champions League games, which it held for three seasons beginning in 2015/2016. Exclusivity rights to the most important competition for clubs at European level has not brought the results that Mediaset Premium was expecting. Its decision not to bid either in June nor in January is probably caused by the impasse of the negotiations between its parent company – Mediaset – and the French company Vivendi, which was close to acquire the majority of shares of Mediaset Premium few months ago. It is worth mentioning that in the recent past Mediaset Premium invested €426 million, €804 million and €849 million in the last three cycles for the Serie A rights. Not taking part in the current auction might imply a change in Mediaset Premium’s priorities.

Another reason why the total value of the rights has failed to reach the Lega’s minimum request is the lack of bids from operators that are currently not in the market and that were expected to have joined the race for the rights. In the weeks before the release of the documents, there were rumours about possble bids from Telecom Italia, Amazon, Facebook and others. None of this speculation proved right, suggesting the Lega overestimated the value of the rights and consequently the appetite they could trigger among international players.

Research by Market
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