By Mark Worden
The days of traditional linear-TV broadcasters winning exclusive media rights to top-level sports events appear to be over, while the amount being offered for those rights also seems to be falling.
Despite the growing number of streaming platforms fighting traditional linear-TV broadcasters for the whole or part of the established sports media rights recently, the money being paid for them appears to be declining. And the blame cannot be attributed to the current Covid-19 pandemic alone.
In exclusive research carried out by MTF Sports Value, part of TechMutiny’s sister publication MediaTainment Finance, we learned the number of media rights gone to OTT (over-the-top) streaming services increased five-fold between 2016 and 2020.
Since then, a barely known Australian start-up streaming platform called Sports Flick astounded the sector by outbidding incumbent broadcaster Optus Sport for the highly coveted exclusive rights to UEFA’s Champions League soccer tournament in the country.
Amazon Prime Video has offered a reported US$1bn-plus a year to the NFL, the elite American-football league, to air more live games exclusively on its platform from the 2023 season to 2033.
Nevertheless, it would appear that, in overall terms, the sports-rights business faces an uncertain future.
Covid brought home something that was already evident, broadcasters had realized they were paying too much
Limiting sports value
According to lawyer Paolo Macchi (pictured, below), a Milan-based specialist in audiovisual rights and a Senior Associate at legal firm Withers: “The value of sports media rights has increased dramatically over the last 15 years, but I think it has now reached a ceiling. It’s unlikely that it will go up further.”
Rick Nunez, a business-of-sport strategist based in Sydney, Australia, goes so far as to say: “I actually think the value of sports rights peaked a couple of years ago and that the Covid epidemic simply brought home something that was already evident, namely that broadcasters had realized they were paying too much.”
This observation applies to both traditional broadcasters as well as the OTT streaming services, like Amazon Prime in the UK and DAZN in Germany and Italy, which use the Internet to bypass traditional broadcasters and go directly to sports fans on computers and mobile phones.
But an example of the falling financial fortunes from both traditional broadcasters and OTT platforms seeking the media rights can be seen at Italy’s Serie A, the top tier of the country’s football league, or “Lega.”
Italy’s Top League wins less
Until the advent of England’s Premier League in 1992, Serie A competed with Spain’s La Liga for the title of Europe’s richest and sexiest soccer championship.
The annual value of Serie A’s current exclusive domestic-viewing contract (for 2018 to 2021), which was shared by traditional broadcaster Sky Italia and streamer DAZN, was €973m (US1.14bn).
La Lega was hoping to up this to €1.15bn (US$1.35bn), an increase of 18%, for exclusive rights to the next three years’ live Serie A games (from 2021 to 2024).
Both Sky Italia and DAZN submitted offers, as did Discovery (the owner of Eurosport) and Spain’s Mediapro.
The winning bid for the 2021-to-2024 cycle has gone to the extraordinarily ambitious streaming service DAZN; Sky is out. Crucially, Serie A will receive €850m (US$996m) per season for the live domestic rights, 27% less than the €1.15bn ($1.35bn) it was demanding.
According to Richard Whittle (pictured, below), a Northern Irishman who has made a career as a soccer commentator in Italy, “the figures fell well short of what they were looking for.”
But it has not been that straightforward for DAZN. It moved into Italy with great fanfare in 2018 and even acquired the naming rights for the underground station at San Siro, Milan’s iconic soccer stadium (home to both of the city’s teams, Inter and Milan, which is known outside Italy as “A.C. Milan”).
And yet last year, when most professional sports championships were suspended on account of the Covid pandemic, DAZN and Sky even delayed payment to La Lega and were taken to court. Rick Nunez (pictured, below) says: “DAZN was originally supposed to become the ESPN2 for the world and that hasn’t happened.”
The international challenge
Problems with sports’ broadcast rights are by no means limited to Italian soccer. Bloomberg reports that, in the USA, NBCUniversal’s sports channel NBCSN will go dark at the end of this year.
In Australia, Nunez cites the example of the Murdoch-owned Fox Sports channel, which is reportedly struggling “because it has paid too much for local sports.” He continues: “They primarily show Rugby League and Australian Rules Football” and financial problems have meant that “they’ve had to let go of other sports such as the local basketball league and the local soccer league. Now, I’m not saying that that’s happening in every country, but there are similar problems.”
Nor are these problems purely Covid-related. It’s also due to the increasing fragmentation of the market, or what Nunez calls “the decentralization of eyeballs.”
The technology challenge
Sport is no longer the great TV magnet that it used to be. Says Nunez: “People under the age of 30 are basically no longer watching television and sport is having to compete with other forms of entertainment like movies and series on Netflix.”
Short attention span is another problem: fewer viewers (of all ages) have the appetite for a full sports event and prefer to watch highlights and clips on their phones.
With both traditional and OTT broadcasters facing challenges, it is generally thought that the future of sports broadcasting will be a hybrid of the two. Nunez points to the example of Rugby (Union) in Australia, the media rights to which will be shared by Channel Nine and a streaming partner, Stan, which he describes as “the local equivalent of Netflix.”
A new generation of tech broadcasters
But will powerful (multi-functional streaming-media) organizations like Netflix get into broadcasting sport in the same way that Amazon Prime has?
Paolo Macchi thinks that they have a natural advantage (compared to a specialist like DAZN, which only offers sport): “Whereas DAZN had to look for new subscribers, Netflix and Amazon already have vast numbers of them.”
However, Macchi doesn’t rate Facebook’s chances when it comes to streaming sports: “Facebook is losing its luster: youngsters are no longer interested and even older users are getting bored. Twitter is also unlikely, but I can definitely see a future in streaming sport for Amazon and Netflix.”
Mark Worden is an international journalist and author. He is also a Research Manager at TechMutiny and MediaTainment Finance. Tommy D’Amico is the researcher for the current edition of MTF Sports Value. Featured image – by Mark Worden. Rick Nunez can be reached at https://businessofsport.com.au/