Cost of English Premier League’s rights in Africa will rise
On Tuesday last week, the English Premier League announced that Sky Sports and BT Sport have won the League’s domestic television rights at mind boggling cost of $7.9 billion over three years starting in the 2016-17 season, an incredible 70% increase over what they’re currently paying. Those figures caught the attention of your blogger that led him thinking what the windfall means to football clubs in the Barclays Premier League and the fans across the World and in particular Football mad continent of Africa.The TV rights deal could well see the cost to broadcast those games rise in Africa where Manchester United, Arsenal, Liverpool and Manchester City have cult like following. With the international bidding next to get underway after United Kingdom’s Sky and British Telecoms paid a king’s ransom to broadcast the games for the next block of three seasons, all eyes will be on just how much South Africa’s DSTV will be willing to pay for the rights for sub saharan Africa with exception of Nigerian market where it has competitor.The BPL television rights for three seasons starting from the 2016/17 season was astonishingly higher than the previous TV deal in the United Kingdom, with the cost of the rights driven up by fierce bidding from not just Sky and BT but other companies too, according to official bidding report.With the price of United Kingdom rights ballooning, the cost of international rights are expected to rise but not by the quantum seen in England.
International rights for the current block of three seasons which ends after the 2015/16 season. It’s been reported that the sale of the current overseas rights to broadcasters in Africa was £205m.The expectation is that it could rise by as much as 25% for the upcoming auction. DSTV has been mum over just how much it paid to buy the current rights but it has been speculated to be as much as £400m from the current £205m for sub saharan Africa. Analysts say the price for the rights to broadcast the BPL in Sub Saharan Africa was driven up by emerging media companies bankrolled by wealthy businessmen interest the last time around. As the bidding was done without the knowledge of what rivals have put on the table, the cost to secure the rights had escalated in the previous bidding process in part out of fear of losing the rights. The Premier League does not set a floor price when it seeks to sell rights in regions like Sub Saharan Africa but it will seek a higher price.“DSTV may not pay more than what it did for the current rights but that depends on what other broadcasters will do,” says a Johannesburg based analyst I spoke to last Friday.A number of media companies are interested in bidding in the upcoming auction for the Sub Saharan Africa rights. They sees value in adding content such as the BPL to drive subscribers to their network, similar to the strategy employed by British Telecom in the United Kingdom. The question is just how much they will pay.
The cost of securing the rights on a per-subcriber basis will be high given that some have a smaller base compared to DSTV.In its marketing strategy, DSTV claims its service is more than 50% of households in the continent but with about half of DTSV’s customers taking its prized sports package where its key asset is the BPL games, the loss to such rights will hurt the South African company.According to a friend familiar with the matter,DSTV has maintained that it will not overpay to keep the rights to broadcast the BPL but that remains to be seen. Previous increases in the cost of content rights for sports have been passed on to subscribers of the sports package but there could be a limit just how much more subscribers will be willing to pay to watch the BPL on DSTV that is synonymous with the European Football.Keeping the rights at an affordable price will be important to DSTV given that its last reported quarter has showed some strains in its business. Experts say it missed earnings estimates and revenue and cost pressures have emerged.Analysts point to a decline in the Pay-TV and Super Pack subscribers on a quarter-to-quarter comparison, believing that emergence of more pay-Tv providers is hurting its business. An insider I spoke to sometimes last year believes DSTV will give up exclusive rights to certain programmes in order to lower its costs but that hasn’t happened yet.DSTV has the flexibility to re-negotiate terms with their content providers in order to manage costs and am one of those who think content cost has been closely watched at South Africa’s company where it wants to keep such costs at around a third of revenue. The weaker rand against the US dollar will not affect DSTV for the foreseeable future.