Sport selling out? Free-to-air V subscription TV

The much publicised financial troubles of satellite broadcaster Setanta in recent days have highlighted the increasingly complex media landscape facing sports rights-holders when they try to sell their most valuable assets.

Setanta owns rights to show a number of popular sports properties in the UK and Ireland including a package of live Premier League matches, the Scottish Premier League and the Indian Premier League (cricket). According to the BBC and others, Setanta is trying to renegotiate payment schedules due to cash-flow difficulties. It is clearly not in the interests of rights-holders to see their broadcaster go bankrupt but equally they are anxious to protect revenue they thought was guaranteed.

Subscription channels such as Sky Sports in the UK, Canal+ in France, ESPN in the USA and Eurosport have been competing with free-to-air broadcasters for TV sports rights for the last 20 years or more. Sky Sports claimed a major coup when they first bought the English Premier League rights for the 1992/3 season, with the result that football fans in England had to pay an extra subscription to watch live league matches.

Since that time rights-holders for the most popular sports properties in the UK and elsewhere have faced a dilemma. Very often subscription channels have bid more than free-to-air stations for exclusive rights because live sport is a proven business driver. However, the audience they attract is almost inevitably smaller than the free-to-air channels. The smaller audience may have a negative impact on sponsorship sales and it reduces the visibility of the sport.  

The basic criteria for choosing which broadcaster to sell the rights to are:
- who can offer the most money?
- who can offer the best coverage?
- what are the potential TV ratings? What will be the impact on sponsors and interest in the sport/event?
- how certain is it that the broadcaster will be able to pay?

In the UK, football, rugby union, rugby league, cricket, boxing and other sports have all grappled with this decision at one time or another. There has been significant debate about whether selling rights exclusively to subscription channels damages a sport (see the Daily Telegraph on English cricket, whose live rights are all currently held by Sky).
 
The success of Sky Sports in particular led to new legislation in 1996 designating certain sports events such as the FIFA World Cup, Olympic Games and Wimbledon Championships as “listed events”, which have to be offered first to free-to-air broadcasters. For “B” category events there must at least be an opportunity for free-to-air channels to show highlights. The UK list is currently under review and, following a European Union directive, similar lists now exist in numerous European countries. Naturally, rights-holders would like to have a full range of broadcasters to choose from but it is no longer a simple decision to opt for the highest bid. Mobile and internet rights further complicate the issue.

The new trend is for seasons, events and tournaments to be divided into chunks for sale to different broadcasters. This approach has the advantage for rights-holders that some of their most popular assets are available on free-to-air channels but the disadvantage that rights are not sold exclusively, perhaps resulting in lower fees. 

Setanta’s future seems to be in the balance. Expect to see rights-holders reduce the risks by packaging their sports assets for sale to multiple broadcasters. Expect also to spend 10 minutes with the remote control, frantically trying to work out which channel is broadcasting tonight’s match…

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