Power Play: Why are sport broadcasting rights still so expensive

Since newspapers were first printed, sport has always been an important part of the content offering. It was a snug little symbiotic relationship where sport needed the publicity offered by the media to grow their following and publishers, in turn, needed engaged fans who’d buy their publications for sporting news and analysis.

The arrival of mass broadcast media upset the power balance, throwing this mutually beneficial relationship off kilter.

Major sports with global audiences have reached a point where they need the media far less than the media needs them. These days, sport federations can pick and choose who they will allow to cover their games. And such is the demand to cover games that they can charge broadcasters almost anything they like.

The money is really quite outrageous. The UK broadcast rights for the Premier League are currently worth approximately £1.7 billion (roughly R2.7 billion) per season.

It may seem preposterous to think that in an age of ShowMax and Netflix, video-on-demand and Catch Up, people will still look to pay such outrageous amounts to broadcast an event.

Of course there is big money in on-demand content too. Netflix spent upwards of US$100 million (over R1.3 billion) to make the Kevin Spacey series, House of Cards. That’s a lot of money and a lot of programming. But it’s nowhere close to what broadcasters are paying for sport. And at the moment there are no signs of that changing. So why does sport still offer so much value? The reason is in the way fans engage with it. Crucially, sport events are best viewed live. Ask any sport fan: they’ll much rather watch a game live, even if it means sitting through the ad breaks. And herein lies the key to this multi- billion industry.

Sport still sits well with advertisers. Unlike House of Cards where you can sit down on Monday evening after work and watch a whole season before returning bleary eyed to work on Tuesday, you cannot fast-track a game. When ads play during half-time you can’t fast forward because it is live. And because, unlike House of Cards which culminates with a cliff- hanger at the end of every season, sport offers climaxes on a weekly basis – lots of them.

And the value of these broadcasting rights looks set to increase rather than decrease in the foreseeable future. Broadcasting rights are sold per region and channel. The R2.7 billion that was paid for the English Premier League was only for UK broadcasting rights. That means they can sell the exact same thing more than once to different regions. On top of that, data, mobile, digital and many other channel rights can also still be monetised.

Amateurs might try to sneakily broadcast matches over channels like Facebook and Twitter, but the experience is so second rate that it has no effect whatsoever on the big-boys delivering the engaged audiences that advertisers so desperately want to talk to.

Online streaming is a would-be contender emerging in this space, but securing premium rights for digital platforms won’t come cheap – not when the likes of SuperSport, Sky and BT are willing and able to pay billions. And when you spend those amounts, you do everything you can to protect your investment and leverage it on digital as a value-add to subscribers.

There are disruptors in the space, showing areas that can still be played in. The Perform Group are probably industry leaders when it comes to acquiring and exploiting digital rights. Over the last couple of years they have stepped fully into the big time, recently acquiring broadcast rights for The J League in Japan, but they started out small.

Initially The Perform Group acquired rights for smaller leagues in peripheral territories. They monetised these successfully through betting products and have now grown into a fully fledged digital broadcaster, sharing their programming globally. They are a great example of how a good strategy, coupled with a good product can open up multiple revenue streams.

It’s time to start looking for those opportunities. The time for video and live content in now. If you’d like to explore this world and the opportunities it offers more, get in touch  .

ANTHONY’S BIO:

Anthony Pascoe is the General Manager at Teamtalk/Mobimedia. As a former journalist and syndication expert, he’s perfectly suited to running the content division at Ole Media Group.