Market Insight

Leagues call on Saudi Arabia to act against beoutQ

August 01, 2019  | Subscribers Only

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The rights holders of the world’s major football competitions have issued a joint statement condemning ‘the theft of intellectual property’ by beoutQ, the pirate broadcast operation which has been illegally transmitting pay TV channels in the Middle East and North Africa (MENA) region for the last two years.

FIFA, UEFA, Europe’s Bundesliga, LaLiga, the Premier League and Serie A, and the Asian Football Conference (AFC) issued the joint statement on 31 July, calling on the authorities of Saudi Arabia to take action against the service, which is widely believed to operate from the Kingdom.

‘Following thorough analysis by technical experts of how beoutQ operates from a technical perspective, we are satisfied that beoutQ is operating specifically to target customers in KSA and is utilising the facilities of at least one KSA-based entity.’ The leagues said they had approached nine law firms in Saudi Arabia, but all had either refused to act on their behalf or recused themselves after initially accepting instruction.

The main target of the pirate service is BeIn Media, the Qatar-backed broadcaster which owns rights to most major sports in the MENA – including all of the leagues in question (the AFC ended its exclusive deal earlier this year in order to protect its rights). BeIn Media has been pressing rights holders to support its case against the Saudi authorities, who have so far denied any links to the pirate operation.

BeoutQ launched as an online, geo-blocked service in August 2017 in Saudi Arabia. In October the same year, the first beoutQ Sports channel was launched, again only in Saudi Arabia. By early 2018 the network had expanded to offer 10 channels in HD. During 2018, beoutQ started offering full pay TV packages, complete with set-top boxes, smart cards and an advertising campaign spanning TV, radio and online media. Before the 2018 FIFA World Cup, the service expanded to other MENA countries including Egypt, Bahrain and the UAE.

BeoutQ is broadcasts BeIn Media’s content (film and TV series as well as sports) with a very small delay of less than 15 seconds and overlaying tickers to conceal BeIn logos. BeIn has obtained technical evidence from three digital security and technology companies, Cisco Systems, NAGRA and Overon, that beoutQ channels are being distributed by the Arabsat commercial satellite system. Arabsat is the main satellite operator in the Arab World and was created as a joint company by all member-states of the Arab League. Saudi Arabia is the largest shareholder of Arabsat (with 36.7% of shares), hosts the organisation in its capital, Riyadh, and is believed to have an influence on all major decisions taken by Arabsat.

Our analysis

Yesterday’s statement falls short of directly naming Arabsat (using instead the term ‘a KSA-based entity’) or implying any involvement or culpability from the Saudi authorities. But it does represent a response to calls for support from BeIn, which has warned that it may have to reduce its rights payments if it continues to be pirated. It follows similar protests from other rights holders including AELTC, organiser of the Wimbledon tennis tournament, which complained about the pirating of coverage of the event for the last two years by beoutQ. In October 2018, Sky and BBC wrote to the European Commissioner for Trade urging the EU to approach the government of Saudi Arabia asking for a commitment to deal with the issue of beoutQ. BBC and Sky also warned that illegal beoutQ’s boxes have started circulating in European countries.

According to information provided by BeIn Media, beoutQ has inked deals with hotels, restaurants and other venues in Saudi Arabia and is actively seeking to replicate these deals in other MENA countries. BeIn Media is claiming that the blockade of its signals in Saudi Arabia, Egypt and Bahrain, and the launch of beoutQ, has cost it around $1 billion in lost revenues, in tarnishing its brand and in reducing the value of its investment in the pay TV business.

IHS Markit estimates that BeIn Media has suffered the loss of almost 45% of its subscriber base (Saudi Arabia was the largest market for BeIn before June 2017 and Egypt its third largest market). IHS Markit estimated that BeIn Media had lost revenues to the scale of $600 million, solely from home subscriptions (therefore excluding hotels, restaurants, cafes), during the 18-month period from mid-2017 to the end of 2018.

BeIn Media has unleashed a multi-pronged strategy to fight against beoutQ. First, it garnered support from the sports rights, pay TV operators and broadcasters like Sky, BBC, NBCUniversal and Eleven Sports Network and US bodies like the US Chamber of Commerce and the International Intellectual Property Alliance.

Second, it has launched appeals to national and international organisations urging them to take action against beoutQ and the government of Saudi Arabia which, BeIn Media alleges, is financially and politically backing the rogue operator. The state of Qatar, acting on behalf of BeIn Media, had filed a case with the World Trade Organisation (WTO) accusing Saudi Arabia of serious violations of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights. BeIn Media and its US studio, Miramax, have filled a submission to the Office of the United States Trade Representative demanding that Saudi Arabia be identified as a Priority Foreign Country or be placed on the Priority Watch List. Third, the Qatari operator has launched an international investment arbitration against the Kingdom of Saudi Arabia for damages totalling more than $1 billion.

Logically, the efforts of BeIn Media to shut down beoutQ, with the assistance of international pressure might bear fruit. However, this might take a lot of time as the Qataris have no legal means of enforcing a decision on the territory of Saudi Arabia. Shutting down beoutQ will not solve the issue of securing access to premium sports content to viewers in Saudi Arabia, Egypt and Bahrain. IHS Markit is aware that before the start of FIFA World Cup 2018 last summer, meetings between the Qataris and the Saudis have taken place with the intermediation of FIFA. The two parties were negotiating a compromise solution where the Saudi broadcaster STV would acquire part of the rights that BeIn Media controlled. The negotiations ended without a solution, however, they may be repeated in the future, probably before the next major international competitions - UEFA Euro 2020 and the Tokyo Olympic Games. It should be noted that the Qataris hold all major sports right at least till 2022. A possible solution might be for Saudi Arabia, Egypt and Bahrain to re-open their markets to a ‘skinnier’ version of the BeIn Media content offer comprising only the sports channels, leaving aside more political content like news and current affairs programming.

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