Roger Domeneghetti, Lecturer in Journalism, at Northumbria University discusses the value of the Premier leagues TV rights falling for The Conversation.
In a muted statement and without much fanfare, the Premier League announced that it has sold the five main domestic TV rights bundles for 2019-22 for £4.464 billion. At face value, the eye-watering sum would seem like cause for celebration, but it can’t hide the fact that this is the first time since the Premier League was launched in 1992 that the value of its TV rights has fallen.
It must be acknowledged that this is not a crash, but a correction – indicative of the fact that the last two rights deals, negotiated in 2012 and 2015, which both saw increases in the region of 70%, were overpriced.
Furthermore, the Premier League will be quick to point out that two rights packages remain unsold – but they will have to fetch a considerable price to match, let alone exceed, the domestic deal struck three years ago. That these packages – designed with digital media giants such as Amazon and Facebook in mind – are still up for grabs will perhaps be an even greater cause for concern.
Once again, Sky and BT are the league’s suitors with the former maintaining its three-decade long dominance. Sky has increased the number of games it will show per season (albeit only by two), and has secured the “first pick” of weekend matches and all the most desirable kick-off times. Most significantly, it has reduced its outlay from £4.1 billion to £3.579 billion, a reduction of 16%. This gives the company breathing space while it begins to offer its TV channels via broadband to meet competition from the likes of Netflix.
BT has secured the least-coveted, early Saturday kick-off slot from the 2019/20 season and has the rights to ten fewer games per season than in the current deal, meaning it is paying slightly more per game. However, unless the firm buys one or both of the unsold packages, its overall outlay will fall by £75m across the lifespan of the deal, to £885m.
“Financial discipline” was the watchword of both companies going into the negotiations – but the most significant sign that there would be deflationary pressure on the rights deal was the content-sharing agreement they signed late last year. The deal means that from 2019, just as the new Premier League rights deals start, Sky will be able to market and sell the BT Sport service to its customers, while Sky’s Now TV streaming service will become available to BT customers. In effect, it is a truce which removed a significant amount of the competitive tension between the two companies.
Unsold digital packages
This in turn meant that it was imperative for the Premier League that there was at least one other bidder. In recent years, companies such as Amazon – which recently secured the UK rights for the US Open tennis tournament – and Facebook – which last year made an unsuccessful $600m bid for the Indian Premier League cricket – have entered the sports rights market. In a move designed to entice such companies to bid, the Premier League created two new minor packages which offered the opportunity to broadcast two entire rounds of ten games simultaneously.
In some respects, this was an attempt to replicate the landscape in the early 1990s. Then, the entry into the market of Sky – a media firm using a new delivery method and subscription model – saw the value of the rights increase significantly, from £3.1m a season in 1986 to £38.2m in 1992. It also saw two traditional broadcasters, the BBC and ITV, lose the rights altogether, a position from which they have never recovered.
Yet as things stand, the new packages remain unsold and no digital broadcaster has yet bought any rights. The Premier League has said that “multiple bidders” have expressed interest in the two remaining packages and they still could end up in the hands of a digital company. However, reports that the reserve prices were not met and that the league is considering bundling the unsold packages up with highlights rights suggests the league’s chief executive Richard Scudamore has been left with a sizeable headache.
Thinking outside the box
The Premier League might have been better served by keeping an eye on the long-term and following the NFL’s lead. In 2016, the NFL created an exclusively digital rights package that sees a small number of its Thursday-night American Football games simulcast online alongside traditional TV broadcasts. Aware that fans’ viewing habits are changing, the NFL is experimenting ahead of the next major rights auction in 2021.
Where those rights go, and particularly how they are split between traditional and digital media, will likely have huge significance for the next Premier League auction due to take place the following year.
An exclusive digital rights package in this auction would likely not have secured a fortune for the Premier League. But it would have laid potentially lucrative foundations by bringing at least one digital media firm to the table, allowing the league to test the viability of different delivery methods so it could fully exploit the available technology in three years time.
This article was originally published on The Conversation. You can read the original article here.
