Broadcast TV – Mostly about sports

BT’s win over Sky for the champion’s league highlights the crucial nature of sports.

• The value of broadcast rights is rapidly declining as many users are quite happy to consume content that has been time shifted.
• There are some emerging exceptions to this rule (see here) but the one real exception is sports.
• Users are unwilling to watch sporting events that are not occurring in real time and because of this, the broadcast rights for live sports are likely to continue gaining in value.
• The over-the-top plays (OTT) like Netflix are banking on the new trend of consuming TV series all in one go (binge viewing) but there is no way that this can happen with sports.
• Hence, OTT has nothing to add to sporting events meaning that they will become more and more valuable while the rights for other types of content will become less and less.
• This was highlighted strongly yesterday with BT’s willingness to pay £299m ($478m) for the rights to broadcast the Champions League.
• The last time these rights were auctioned Sky paid £160m which shows that BT’s ambition to break Sky’s stranglehold on the UK market is almost without limits.
• It also clearly demonstrates where the value of content is moving to and what users are likely to be willing to pay a premium for.
• This is an ominous sign for mid-2015 when the rights for the Premier league come up for blind auction.
• The Champion’s League is the second most popular reason for subscribing to Sky Sports with the Premier League by far the biggest reason.
• This is an absolute must win for Sky as it will lose its differentiation if it fails to secure these rights in 2015.
• This is a trend that I expect to be repeated in other parts of the world and the broadcasters must secure these rights.
• Failure to secure these rights will see an acceleration of households cutting the cord and the end of the broadcast monopoly as we know it.
• This is going to place pressure on the margins of the broadcasters and further enrich the professional sports industry.
• If the broadcasters can hold onto their subscribers via exclusive sports and be smart about how they offer catch-up television and on-demand (see here), they might just survive.
• The broadcasters have time to act but their current position of denial is not helping their ability to adapt to meet the inevitable change in their industry.