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Volume 10 No. 22


Sky "suffered a decline in operating profits over the quarter as it ramped up spending on content and marketing to defend against BT’s move into televised sports," according to Robert Cookson of the FINANCIAL TIMES. The 8% decline in operating profits to £285M ($460M) over the three months to the end of September "was not as bad as investors had feared, however, sending Sky shares up sharply on Thursday." Sky is "locked in a big-budget battle for sports fans with BT," which has to date invested about £1B in its recently launched sports channels to "bolster the appeal of its broadband services." Sky CEO Jeremy Darroch said the decline in operating profits “was in line with our expectations as we invest in new services and absorb higher Premier League costs.” Sky this year negotiated a Premier League deal that involved paying £760M ($1.2M) a year for the next three years. This compares to about £540M a year under its previous contract. The company’s total programming costs for the quarter rose 6% to £622M compared with the same period last year. Marketing costs were up 21% to £320M. Berenberg Media Analyst Sarah Simon said that Sky "would face more pressure to increase spending on sports rights." Bids for rights to the Champions League football competition are due next month and BT has indicated that it "may enter the running and challenge current UK rights holders ITV and Sky." JPMorgan Media Analyst Mark O’Donnell said that while Sky’s results were better than expected, it was "still too early to draw definitive conclusions about the consequences of increased competition from BT." O'Donnell: "Given that BT and other key U.K. broadband players are yet to report [their results], the market will need to wait to put Sky’s broadband additions for the quarter into context" (FINANCIAL TIMES, 10/17).

Russia’s state-run TV company VGTRK has canceled plans to make its pay-TV channel Sport available free-to-air. VGTRK is withdrawing its application for a free-to-air license for Sport in digital terrestrial multiplex 2, which will be launched as part of Russia’s switch to digital TV in '15, a company spokesperson said. The company did not provide an explanation for its move, but the announcement coincided with the finance ministry’s plans to substantially cut subsidies to state-run media in '14 through '16. Under the ministry’s plans, by '16, state subsidies to VGTRK are to decrease by one quarter from the present figure of 22.8B rubles ($707M) a year. Russian business daily Vedomosti quoted a source close to VGTRK as saying that with the decline of state subsidies, the company will not be able to afford a $30M a year license fee for free-to-air broadcasts. VGTRK originally launched Sport as a free-to-air channel back in '03. However, in '10, the broadcaster replaced it with Rossiya 2, a channel focused on youth audiences, which airs some sports programs alongside other content. In '11, Sport was re-launched on cable and satellite.
Vladimir Kozlov is a writer in Moscow.

Liga TV General Dir Ilya Hercus told the ProSport conference in Moscow on Thursday that Liga TV, the TV arm of the Russian Football Premier League, aims to turn its channel, Nash Futbol, into a flagship of the rapidly developing sports pay-TV market in Russia by '16. “The main strategic goal is the creation of a new market for sports pay-TV,” Hercus said, adding that Nash Futbol, which RFPL acquired from the satellite operator NTV Plus, is going to play a leading role in that market. According to Hercus, although 99% of all ad budgets on Russian TV are currently accounted for by free-to-air channels, RFPL chose a pay-TV option because no free-to-air channel would agree to air all the games on each matchday, which RFPL believes to be vital. Among the challenges ahead, Hercus called for the improvement of the quality of broadcasts, extensive use of mobile devices and social media, and the changing of perceptions of viewers, who are used to watching TV content for free.
Vladimir Kozlov is a writer in Moscow.

SINA Corp. and NBA China have expanded their partnership to provide fans in China with access to NBA content on multiple SINA platforms. The enhanced partnership makes the NBA the first U.S. professional sports league to offer specific destinations for all 30 teams online and via mobile, a live game streamed daily on mobile, and original programming, and also includes the launch of a new NBA online community. The multiyear deal was announced Thursday by SINA President and CEO Charles Chao and NBA Commissioner David Stern. SINA will continue to operate and will deliver a wide range of enhanced NBA features on, the Mobile Web, SINA Sports (SINA’s multisport application), and SINA Weibo (SINA’s Microblog). The fan community on NBA Weibo will provide exclusive NBA content and benefits including new programming, interactive games, merchandise, virtual items, and special access to NBA events. The community will further expand the league’s social media presence on SINA Weibo, where the NBA is the leading company with the most followers overall. (NBA). BLOOMBERG reported that Stern said interest from Chinese investors about buying into NBA teams is a "very good thing" for the league. Stern said, “We have been approached by, I will say Chinese investors, as we don’t count their money to see whether they are billionaires or multi-billionaires. If these markets want to invest in the NBA by buying goods, if they would like to buy television rights and certainly if they would like to buy franchises or invest in franchises, I think it’s a very good thing. I have been in favor of that for years.” Stern did not identify the investors (BLOOMBERG, 10/17).

WWE and Dutch TV station RTL announced that "WWE Raw" will be broadcast in the Netherlands. Beginning Saturday, the two-hour show will air on RTL7 at 8pm local time each Saturday (RTL). ... has re-launched. Sportal has also joined with the Sporting News to provide coverage of the NFL, MLB, NHL and the NCAA (Sportal).