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SBD/June 14, 2012/Media
EPL Lands $4.7B TV Rights Bonanza From Sky And British Telecom
Published June 14, 2012
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HOW IT HAPPENED: The MANCHESTER EVENING NEWS reported the EPL "credited the thrilling last-gasp" title victory by Manchester City for helping to boost the price by $1.935B (MANCHESTER EVENING NEWS, 6/13). In London, Philippe Naughton reported the deal "will give a huge economic boost" to EPL clubs. BT, meanwhile, will "set up its own dedicated channel to run on multiple platforms." Scudamore said BT would “deliver new ways in which fans will be able to follow the competition” (LONDON TIMES, 6/13). In London, Matt Scott notes leading clubs' "annual incomes will grow by more than" $46.6M each, with player "wages and transfer fees likely to soar." Scudamore was "keen to stress his hope that ESPN ... will retain a relationship with the League with deals in overseas territories." Scott notes if similar growth is "achieved in the overall value of overseas rights, the League stands to earn" a total of $2.8B a year from broadcasting, almost 2 1/2 times more than it earned in the '09-10 season (London TELEGRAPH, 6/14).
WHO'S GOING TO PAY? BLOOMBERG NEWS' Jonathan Browning reported BT will pay a $34.2M deposit this month followed by six installments of $187M. The company is current investing $3.9B across the U.K. in fiber broadband, and securing EPL rights "fits naturally with this, as consumers increasingly want to buy their broadband and entertainment services from a single provider” (BLOOMBERG.com, 6/13). In London, Graham Hiscott noted the "size of the deal, and the scale of the increase, has led to fears armchair fans will foot the bill through higher package prices." Sky said that it was "too early to say how much it would charge for the new football packages from 2013 onwards." The broadcaster is "likely to face the choice of either raising prices or cutting costs elsewhere" (MIRROR.co.uk, 6/13). The BBC's James Pearce notes EPL clubs are "set for a windfall," and players will "no doubt reap the rewards as well." The concern from fans "will be over who's going to fund this dramatic rise in rights fees." Supporters will "fear that it will be them through increased subscriptions" (BBC.co.uk, 6/13).
DEFYING THE RECESSION: The BBC's David Bond wrote, "Once again Premier League football has shown its extraordinary ability to defy financial gravity." Much of the growth "can be explained by the increase in live matches -- up from 138 to 154." But it is also "down to extra competition in the marketplace." Sky remains the EPL's "main media partner but the price of the rights was driven up by interest from other companies such as current partners ESPN and Al Jazeera." The deal is "another reminder of the remarkable financial success story" of the EPL (BBC.co.uk, 6/13). The WALL STREET JOURNAL's Paul Sonne notes the jump in rights fee "surprised the market" (WALL STREET JOURNAL, 6/14). In London, Ashling O'Connor notes the EPL "bucked the recession." Scudamore: "There was a gasp in the room when the envelopes were opened. I was as surprised as anyone." Scudamore credited the product for the increase. He added, "It has continued to wow audiences. It's a compelling product. People want it. Broadcasters want to broadcast it" (LONDON TIMES, 6/14).
PAYING TO KEEP ESPN OUT? The GUARDIAN's Dan Sabbagh wrote, "Those who believe that the cost of buying the rights to broadcast Premier League games has reached bubble territory are missing the point. The market price for the matches is no longer in line with the commercial value of the games, but instead in line with the value of keeping other cash rich broadcasters like the Disney-backed ESPN out. ... Football may not have needed BT, but it has turned out that phone giant needed football. Its arrival has hiked up the prices for a league that until Wednesday nobody thought could get richer" (GUARDIAN, 6/13). ESPN in a statement said, "We made a strong bid that reflected the value of the rights to our business, and we thank the Premier League for the chance to participate. We're looking forward to continuing our Premier League coverage next season, and continuing to serve fans with great live sports events and programming including the FA Cup, Europa League, Scottish Premier League, Serie A, Premiership Rugby, Top 14, golf, darts, UFC, NBA and much more" (ESPN).
CLOSING TIME: BSkyB shares closed today on the London Stock Exchange at $10.42, down 3.5% from yesterday's closing price. BT shares closed at $3.13, also down 3.5% (THE DAILY).