From the Field of Financial Planning Programmming for the millennial fan UFC appeal a First Amendment issue Cartoon: A star is born The impact of this World Cup title Cartoon: Picking a lane From the Field of Fan Engagement How virtual reality replaces violence How 3 executives saved my career From The Executive Editor: Check in
SBJ/November 4 - 10, 2002/Opinion
Media rights a house with many ‘windows’
Published November 4, 2002
Earlier this summer, a breakthrough decision by the European Commission, the European regulator for all big business issues, mandated a new way of doing sports television deals. This new "law" is both simple and complex at the same time. It is inspired by the American sports business principle of competition, yet in its detail form may offer some useful pointers to American leagues and rights owners and exploiters.
The concept underlying the new decision is the system of Media Rights Windows (MRW), the scientific application of the "unbundling" or "packaging" of media rights.
Simply put, MRW is about not selling all or most of the rights to one buyer, but dividing the rights among a number of buyers. It's about selling the rights in distinctly defined, homogeneous "windows" that each offer some form of exclusivity to the buyer while at the same time being able to co-exist with one other.
In a sense, the NFL is already doing this, maybe more as a result of financial ambition than strategic thought: What started as "how many buyers do we need to get a multibillion-dollar deal?" resulted in a smart strategy. It is this strategy that has been scientifically developed into MRW. So far, the United States has led the inspirational way, yet it is a European tournament, soccer's Champions League (the No. 1 year-in, year-out sports event on TV in Europe) that is going to pioneer true MRW.
From the 2003-04 season, the Champions League will be sold in 14 distinct "windows." Most are broadcast rights in various forms (live packages, delayed, pay-per-view, library), some are new media (streaming, wireless). Some are rights to be sold centrally (by the tournament organizers UEFA), and for the first time some are to be exploited by the participating clubs on an individual basis.
There is even a provision whereby if a live match is not sold within a specified time frame, then the home club has the right to sell it. The big clubs, the likes of Real Madrid, Manchester United, Barcelona, Juventus, Bayern Munich, AC Milan, will now be able to exploit their own content on their own club channels as well as in other club-branded environments.
What could potentially result in cacophony — every tournament stakeholder selling everything — is in fact a careful and cooperatively negotiated MRW framework. Every seller and every buyer is selling or buying a window with something special in it, an aspect of the rights that no other window has, and rights that can be individually exploited without affecting the total financial value.
In fact, the added competition, vibrancy and multitude of consumer offerings points to MRW being a significant boost to a sports media market that has been somewhat in the doldrums recently. And it is also for this reason that the European Commission's stated intention is that MRW should become the mandated sales method for all major sports rights in Europe.
Is this therefore something for American sports industry professionals to observe from a distance, or could the osmosis work the other way as well?
The strength of MRW is that it is 100 percent reflective of the everyday reality of the consumer, the fan. We no longer sit down to watch and consume only one version of a game, be it a "traditional" live game on regular or cable TV. We increasingly slice and dice our consumption of the game according to our lifestyle requirements: maybe regular live, or maybe at a time that is more convenient, or maybe in a more condensed format, or maybe a few days later to settle an argument with friends as to whether the ref missed something, or maybe check out that piece of action via a micro-payment service via the office broadband connection, or maybe eventually over a wireless device with a game included.
In other words, from the consumer's perspective, MRW makes perfect sense. And as the consumer is still as deeply in love with his or her team as before, if not more, and prepared more than ever to spend money to demonstrate this love, MRW is rooted in some very solid economic fundamentals.
You've also been hearing from the networks and sports rights buyers that they have "overpaid" for sports. Great. MRW makes sense here too: tightly define a "Live" media rights window (not a blanket right to just about everything that could vaguely, remotely affect the "Live" window), take 90 percent of the dollars you took before, and then aggressively seduce previously outbid media platforms to build business models with the other windows ("Delayed," "Highlights," "Rolling," etc.). Watch the total dollars blossom, and watch the consumer, the fan become happier than ever before.
I appreciate, of course, that this is a complex business, and I am by no means doing complete justice to MRW beyond introducing a new international development. But whether you agree or disagree, are confused or want to know more, believe me when I say that there is room for all under the MRW umbrella.
Jean-Paul de la Fuente (email@example.com) is founder and principal director of Deureka Consulting.