Analysis: Sport, Not The Draw It Used To Be?
The prime mover in Rupert Murdoch’s UK satellite TV success, sports broadcasting rights, may be floundering as a must-have for TV networks as the high stakes paid during boom time take their toll on balance sheets in these advertising-challenged times.
In the US, bidding wars over various league and competition rights have subsided somewhat with several of the big players bowing out in favour of more creative deal-making with the sports leagues themselves. The NBA has struck a deal with AOL Time Warner which will “explore the creation of a jointly-owned, national 24-hour cable sports network”
In the UK, ITV Digital hoped to emulate Murdoch’s success by paying £315 million in a three year deal to broadcast the Nationwide League. Without the anticipated boost in advertising revenues and subscriber numbers, ITV Digital sank further into debt and are now seeking a way out of the deal much to the chagrin of the Nationwide League.
BSkyB’s deal with The Premiership was the source of some controversy recently when the FT reported that BSkyB must equal or better its previous bid for Premiership football. BSkyB denied that such a clause and The Premiership confirmed this meaning that the next round of bidding may see considerably smaller starting offers from a diminishing pool of prospective bidders.
Indeed such is the lack of competition for BSkyB in this arena that reports suggest that The Premier League is considering setting up its own TV channel in an attempt to bolster the market. Whilst such a deal is reportedly high on the agenda of Premiership bosses it would no doubt rely on a carriage deal with BSkyB, a sticking point for the ill-fated ITV Sport channel.
Top of the sports rights league was Kirch Gruupe, now wrangling with creditors in an attempt remain intact. Kirch spent big on sports rights and was rewarded for its trouble by insolvency and speculation that Bernie Eccleston was poised to buy back Formula One for almost half what Kirch had paid him just a year earlier.
There is doubtless still a huge amount of money to be made from sports rights. The size of the viewing audience, unlike the value of the games themselves, remains undiminished. Despite the lack of return on investment seen by the TV companies in the past year they cannot afford to ignore sports as a key element of scheduling. This summer’s World Cup, it is hoped, will help revitalise flagging TV revenues across the world. One can only speculate as to the fate of the vendor, Kirch Gruppe, when the kick off comes.
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