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TVSPORTSMARKETS N.165

TVSPORTSMARKETS

SPOREL BRIEFINGRio de janeiRo M 2012


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Dear Sportel Delegate,

A warm welcome to the TV Sports Markets Sportel Brieng or Sportel

Rio 2012. Te Brieng is designed to provide delegates with a recap o the

big stories since the last Sportel conerence, and a snapshot o the in-depthcoverage o the industry that is available to TV Sports Markets subscribers.

Youll nd a selection o articles rom the TV Sports Markets newsletter

beginning on page 18. Te selection covers some o the most signicant and

intriguing stories in the industry since last October, including: Eurosports

big deals to hang on to French and US Open tennis rights; Al Jazeeras grab

o Champions League rights in France rom Canal Plus; the International

Association o Athletics Federations ditching IEC in Sports or the European

Broadcasting Union; and Fias big ee increases or World Cup ootball in Asia.

We have also produced a selection o eature articles exclusively or the brieng,

including a top 10 o the most valuable sports rights deals in the world sinceSportel Monaco last October, a map and analysis o the explosive growth in

domestic league ootball rights ees in South America, and a eature on the

companies trying to stimulate the rights market in sub-Saharan Arica.

For the very latest news rom the sports television business, look out or the

new edition o the TV Sports Markets newsletter, copies o which will be reely

available rom the press stand at Sportel Rio.

Our sta will also be present at the conerence. Please eel ree to get in touch

using the contact details below. For enquiries about accessingTV Sports

Markets content, or advertising in the next edition o the Sportel Brieng,

call Paul Santos, our business development manager.

We wish you a productive and enjoyable Sportel Rio 2012.

Frank Dunne

Editor

TV Sports Markets

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[email protected]

(mob) +39 34 95 84 64 23

+39 051 523 815

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[email protected]

(mob) +44 78 55 36 37 06

+44 207 954 3509

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Sen ree

[email protected]

(mob) +44 75 05 73 67 30

+44 207 954 3283

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he Ses & cmme

[email protected]

(mob) +44 79 31 39 05 02

+44 207 954 3483

h a-Mz

Sen an Mne

[email protected]

(mob) +44 7866689444

+44 207 954 3484

the tV spoRts MaRkets teaM

www.tVSportSMarkEtS.coM

spoRtel bRiefing| March 2012

contents

48 bEyoNd thE old coNtiNENt

e big sports rights agencies are gaining strategicfootholds in the Brics and other emerging markets.

50 MEtEoric riSES for local football

South Americas football leagues are enjoying huge

growth in domestic rights fees.

53 thE top 10 dEalS

e 10 most valuable sports rights deals since Sportel

Monaco 2011.

54 califorNia StrEaMiNg

Google and Apple have been linked with major rights

buys, but are not expected to seriously challenge yet.

56 ioc aNd uEfa warM to pay-tV

How pay-television shifts could impact audiences for

this summers biggest sports events.

58 thE froNtiErSMEN

e companies that could reignite rights fee growth

in sub-Saharan Africa.

60 thE big dEbatE

Four industry leaders on the impact of the mounting

Eurozone economic problems on rights fees.

62 NEwS rEViEw

Cuttings from the news pages ofTV Sports Markets

since October 2011.

66 adVErtiSEr profilES

Proles and contact details of our advertisers.

SportBusiness International No.176 03.12 4


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BEYOND ThEOLD cONTINENTfRank dunne, Editor of tV SportS MarkEtS, lookS at how SEVEral of

thE iNduStryS Major SportS rightS agENciES arE gaiNiNg a StratEgic

foothold iN thE worldS MoSt rapidly dEVElopiNg MarkEtS.

The bulk of the value o the global sportsrights market lies in two regions, the US andEurope, and will continue to do so or manyyears. But the tectonic plates o the worldseconomy have been shiing irreversiblyover the last 20 years and while the US andEuropean economies atline, there has beenexuberant growth in Asia and Latin America.

Agencies have been orced to expandtheir horizons to make sure thatthey do not miss out on thepotential these markets represent.Major players like IMG Media,Inront Sports & Media, LagardreUnlimited and MP & Silva arejostling to secure strategic long-term positions in these territories.

Lagardre Unlimitedhas beenexpanding its Stadium Solutionsdivision on the bedrock o the work thatits Sportve subsidiary has done in Europein the sector. With Brazil and Russia setto host the Fia World Cup in the next sixyears, two o the worlds growth marketsare presenting a golden opportunity. UlrikRuhnau, managing director o LagadreUnlimited Stadium Solutions, told TVSports Markets that the company intendedto be ully involved in both countries. Tecompany is currently heavily involved intalks with potential partners in Brazil.

Brazil is a highly attractive market orus, Ruhnau said. It has a young population

and a good economic growth rate. It is amarket which is good or sport, particularlyootball. Tere is a really strong emotionalattachment to the game there. So its a countrywhich is attractive or the entire LagardreUnlimited group. A successul stadiumventure could open up opportunities in theregion or other Lagardre activities, suchas ootball club or ederation marketing.

Te Brazilian ootball ederation has selected12 stadiums or the 2014 World Cup and wellover $1 billion (763 million) is expectedto be spent on stadium renovation alone.Ruhnau said that Lagardre had identiedseveral projects where we can integrate ourknow-how. We want to be involved, post-construction and aer the World Cup, inthe usage and management o acilities orthe long term. Over the last 24 months allthe big players have been in Brazil, but witha ew exceptions, things are still open.

Te companys preerence is to agree long-term stadium management agreements, which

typically run or between 10 and 20 years.We position ourselves as a one-stop solutionor stadium owners. We have a background inootball marketing with many top Europeanootball clubs, so we understand marketingand sales and how to manage match-dayactivities. We want to actively demonstratewhat we say when consulting. We are not justsome theoretical guys, we are hands-on. We

know how to plan intelligently so thata stadium can deliver or its owners inthe long term, not just or three to vematches during a World Cup, he said.

While the rewards in the stadiumbusiness can be high, Ruhnau pointedout that there are also risks. In ootballstadiums, about 70 to 80 per cento the economic success is related tothe key tenant. In Brazil, as in other

ootball countries, that usually means thehome club. A urther 10 to 15 per centcould be linked to concerts and othermajor events hosted by the stadium. Terest comes rom conerences, stadium toursand other activities. Tere is insecurity inthe business plan because a club could berelegated to the second- or third-tier league.

MP & Silvais another agency with aEuropean DNA which is increasingly lookingurther aeld. Te agency has expanded itsoperations in Asia to the point where businessin the region now accounts or over a thirdo its turnover. Among other sports content,

China, Brazil and India are complex and

dicult markets, and having powerul, well-

resourced and infuential partners is vital.

iMg M

48 SportBusiness International No.176 03.12


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the agency distributes ootball rights or topleagues such as Englands Premier League,Italys Serie A and Spains La Liga. oday,we are the leading international agency inAsia or ootball, company chie executiveAndrea Radrizzani told TV Sports Markets.

Te agency has created strong broadcasterrelationships in two Asian markets Japanand Vietnam where other rights-holdershave sometimes struggled to get value.Our success in those two markets isbased on an innovative approach: we oercustomised content packages based onthe scheduling possibilities and budgetso broadcasters, Radrizzani said.

Te rst phase o our Asian presence,he added, was based on supportingrights-holders to penetrate in new andunknown markets. Te next phase was tobuild MP & Silvas wide portolio o rightsand provide additional services to rights-holders in terms o nancial guarantees,distribution, reports and marketing.

Te most recent example o the agencysdevelopment in the region came with the dealin January with the Olympic Council o Asiato distribute the global media rights or the2014 Asian Games. Having the chance tobe part o the Asian Games media strategyand distribution is incredibly rewardingor us, Radrizzani said. We will also actas media adviser in order to guarantee thehighest level o production guidelines and

innovation including digital strategy andon social media portals. Our objective is tocontribute to the success o the OlympicAsian sports movement and improve itsreach to other regions o the world.

Infront Sports & Mediahas lookedto China and to basketball as part o itsexpansion. It began working on marketingand development with the Chinese BasketballAssociation in 2005 and last year renewedits deal through to 2018. Te agency hashelped to secure more live coverage or theCBA league on state channel CCV5 andincreased exposure on regional networksacross China. Perhaps more signicantly as astaging post in the leagues growth, it is beingbroadcast or the rst time to the NorthAmerican market through a deal with OneWorld Sports, the Asian sports broadcaster.

Basketball is likely to be just thebridgehead, with the agency now studyingother sports properties in the country.Inront told TV Sports Markets: Sincethe beginning o our collaboration withthe Chinese Basketball Association, wehave established a strong position andreputation in the Chinese sports market.Tis leading position in China is o highstrategic importance or the Inront Group,as it guarantees access to one o the worldsstrongest growth markets and a ourishingeconomy. Inront is connecting internationallysuccessul sport disciplines and brands to

the attractive Asian market and vice versa.Te key strategic instrument in the global

expansion oIMG Mediahas been thejoint venture, which has been the agencysgateway to China, Brazil and India. Eachis a complex and difcult market or acombination o political and cultural reasonsand having powerul, well-resourced andinuential partners, a director o IMG said.

Te contacts book o the late edForstmann, the ormer owner o IMG,ensured that the agencys chosen partnershad those qualities power, inuence andmoney in abundance. In 2011, IMGs Indianjoint-venture partner Mukesh Ambani wasninth in the Forbes rich list, with a net wortho $22.6 billion. One place ahead o himwas IMGs partner in Brazil, Eike Batista,chairman o the EBX group, with a net wortho $30 billion. In China, IMG has partneredwith the state broadcaster CCV which,directly or indirectly, controls pretty mucheverything that moves in the broadcastermarket o the worlds most populous nation.

In India, the ruits o the venture havebeen a 15-year, $160 million agreement withthe All India Football Federation to developthe game at all levels in the country, and a30-year deal with the Basketball Federationo India to do the same. IMG recently heldtalks with David Stern, commissioner o USbasketball league the NBA, about establishinga proessional basketball league in the country.


Getty


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the south aMeRican sports mediamarket is booming and the regionsdominant sport ootball is central to therise, dominating the sporting landscape.

International ootball propertiesincluding the Uea Champions League/Europa League, Italys Serie A and SpainsLa Liga have all recently seen huge increasesin the region in their new deals. But themost valuable ootball properties in eachterritory are the domestic leagues.

Te size o some o the percentage increases(see map) highlights the inancy o the mediamarkets in some o these territories andthe rapid growth they have experienced inrecent years. Brazil and Argentina have themost valuable leagues but, as more maturemarkets, their rate o growth is slower.

In Colombia, the leagues governingbody has targeted a 1,500-per-cent eeincrease or the ve-year period rom 2012to 2016, compared to the previous contract.

At time o going to print, the Dimayor(Divisin Mayor del Ftbol ProesionalColombiano), the body responsible orthe countrys top two divisions, had onlymanaged to raise close to 20 per cent o its$260 million (198 million) target, signingnon-exclusive deals with pay-televisionbroadcasters DirecV and Supercable,and cable operator Comunitarias V.

Te Dimayor, until now, has stood rmon its strategy o selling the rights on anon-exclusive basis, setting a price or eachbidder related to the size o the operatorscustomer base. It has reused to accept a jointbid rom incumbent rights-holder Alianza, a

joint venture between Colombias two largest

cable operators Une and elmex, and telcoelenica, which is signicantly lower thanthe proposed gure o more than $200 million.

Te other reason or the scale o theincrease was the extremely low ee in theprevious ve-year contract rom 2007 to2011, which was the rst ever pay-televisioncontract or Colombian ootball.

First and second-tier league ootball inChile is shown on the Canal del Ftbol, theleagues own channel. Te 295 per centincrease is based on a comparison o therights ee in the last season o the last rightsagreement between the league and pay-television broadcaster DirecV in 2002, andthe two revenue streams (the rights ee andthe prots rom the channels distribution)generated by the channel in 2011.

Te channel was launched in 2003and turned protable in 2008, aerve years o either making losses orbreaking even. In October 2010, theconsultancy PricewaterhouseCoopers

valued it at close to $700 million.In terms o a straight broadcaster/rights-

holder agreement, the biggest percentageincrease in the region was in Paraguay, at275 per cent. Te steep increase rom theprevious deal was due to intense competitionin the market between incumbent rights-holder, sports broadcaster eledeportes,owned by the Argentinian media groupGrupo Clarn, and telco igo, a subsidiary oMillicom International Cellular. eledeportesnew eight-year deal will begin in 2013.

Te projected 240-per-cent increasein Uruguay is based on a value that is yetto be realised in the new deal. Earlier this

year, the Asociacin Uruguaya de Ftbol,the Uruguayan ootball association, whichsells the rights or Uruguays rst- andsecond-tier ootball leagues, accepted anoer rom incumbent rights-holder theeneld agency to extend its contract until2021. Te oer included an increased eeor the remainder o the current contractperiod, running until 2016, as well as anincrease in the new term, beginning in 2017.

However, the association has now taken theunusual step o giving up its collective sellingrole to allow the 29 clubs to individuallynegotiate their own media-rights deals. Itmade the decision, some local experts claim, inan attempt to scupper the collectively-agreedextension with eneld. Te associationhas been working behind the scenes to puttogether a better oer or the clubs, whichcould include launching its own channel.

Brazil, the biggest market in the regionby some margin, has by ar the most

valuable domestic league, CampeonatoSrie A, worth about $600 million perseason. It is also the most valuable sports-rights property in Latin America.

Te 140-per-cent increase in rights eesrom the previous deal ollowed the moverom collective selling with Clube dos13, the organisation which had previouslyrepresented the top 20 ootball clubs in Brazil,to individual selling by the clubs. Brazilianmedia group Globo negotiated deals rangingrom three to our years with individualclubs, covering the period 2012 to 2015.

Te Clube dos 13 had issued atender in mid-February 2011, which

was cancelled aer Globo and rival

METEOrIcrISES FOr

LOcaL FOOTBaLL

dan hoRlocklookS at thE big

iNcrEaSES iN doMEStic football

rightS fEES iN South aMErica



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1500%

140%

35%

20%

5%

275%

240%

295%

140%

broadcaster Record reused to take part.

Te Argentinian Primera Divisinis the regions second-biggest leaguein terms o rights value, although the140-per-cent increase it achieved orits most recent contract was inateddue to political intervention.

In 2009, the Argentinian governmentlaunched its tbol para todos (ootball oreveryone) scheme in which it acquired thebroadcasting rights to the league rom 2009-10 to 2018-19 to ensure matches were shownon ree-to-air television. Te governmenthas made huge losses on the rights.

Te government deal replaced a

seven-year agreement, rom 2007-08 to2013-14, between elevisin SatelitalCodicada, which is owned by theorneos y Competencias agency andGrupo Clarn, and the Asociacin delFtbol Argentino, the Argentinian ootballassociation. Te matches were broadcaston pay-television under the old deal.

In Ecuador, the expected 35-per-cent risein the ee or the top-tier ootball league, SerieA, is based on the prospective centralisationo the leagues media rights rom next seasonby the Federacin Ecuatoriana de Ftbol, theEcuadorian ootball ederation. At present theclubs sell their own media rights. However,the ederation aces serious opposition tothe centralisation plan. Te seven clubs thatoppose it at present earn close to 80 percent o the total value o the Serie A rights.

Venezuela is the only South Americancountry where ootball is not the nationalsport, although interest is growing, especiallyin light o the countrys improving nationalteam. Venezuela reached the semi-nalstage at last years Copa Amrica.

DirecV and ree-to-air broadcasterMeridiano elevisin jointly acquiredrights or the Primera Divisin rom theFederacin Venezolana de Ftbol, the

Venezuelan ootball ederation. DirecV isthe senior partner in the agreement, whichcovers 2010-11 to 2012-13. Te ee is a20-per-cent rise on the previous three-yeardeal with pay-television operator Sport Plus.

Te top-tier league in Bolivia, the regionspoorest nation, has the smallest media-rightsvalue. State-owned telco Entel signed a six-yeardeal or the rights, rom 2010 to 2015, which

was up only ve per cent rom the previousdeal with commercial broadcaster Unitel.

PrOJEcTED aND SEcUrED PErcENTaGE INcrEaSES IN

DOMESTIc rIGhTS FEES FOr LOcaL FOOTBaLL LEaGUES

uRuguay

aRgentina

paRaguay

boliVia

bRaZil

chile

ecuadoR

coloMbia

VeneZuela


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8/15

THE BIGGEST DEAL o 2011 was signedat the end o the year, as US networks CBS,Fox and NBC acquired rights or Americanootballs National Football League wortha combined $27.9 billion (23.3 billion)over nine years, or $3.1 billion per year. Tedeal, which will begin rom the 2014-15season, was a 63-per-cent increase on the

three broadcasters current deals worth$1.9 billion per year. Te three networks willeach televise three Super Bowls during the termo the deals, continuing the current rotation.

Another deal signed in December was USregional sports network Fox Sports Westsreported $3 billion agreement with MajorLeague Baseballs Los Angeles Angels oAnaheim. Te Angels had market conditions intheir avour during the negotiations, with Foxkeen to secure the rights due to a dispute withanother MLB team, the Los Angeles Dodgers,

which could have resulted in the broadcasterlosing the rights to Dodgers matches. Fox had

also lost the rights or National BasketballAssociation team the Los Angeles Lakers torival network ime Warner Cable earlier inthe year. Te Angels new deal begins in 2012.

Completing a US top three was the FiaWorld Cup deal or 2018 and 2022 withpay-television broadcaster Fox, Spanish-language broadcaster elemundo, owned byNBCU, and Spanish-language radio operatorFtbol de Primera, worth a combined$1.1 billion. Te deal represented a 159-per-cent increase on the $425 million that ootballs

world governing body generated rom the USmarket or the 2010 and 2014 tournaments.

Fias second entry in the top 10 wasor its 2018 and 2022 World Cup rightsin Asia, in a deal with the Inront Sports& Media agency worth $600 million.Te deal was up over 70 per cent rom the$350 million paid by Football Media Services,a joint venture between the Dentsu agencyand Inront, or the 2007-2014 rights

period, covering the 2010 and 2014 WorldCups. Both deals excluded the lucrativemarkets o Japan, Korea and Malaysia.

At number ve, and ensuring US

dominance at the top o the deals table, waspay-television sports broadcaster ESPNs13-year extension, rom 2011 to 2024, to itsdeal with the National Collegiate AthleticAssociation, the US college sport organising

body, worth just over $500 million. Te dealcovers non-exclusive rights outside the US,its territories and Bermuda to the Division Imens basketball championship the annualMarch Madness tournament and rights inthe US to 24 other NCAA championships.

Te MP & Silva agencys acquisitiono the international rights or Lega SerieA, Italys top ootball league, worth351 million ($460 million) over threeseasons rom 2012-13, was the most valuableEuropean deal over the period. Te dealrepresented a 29-per-cent increase on the90.75 million per season MP & Silva paysin its current two-year deal or the rights.

Te rst o two French deals in the top10 was or the rights to the Uea ChampionsLeague or three seasons rom 2012-13.Pay-television broadcasters Al Jazeeraand Canal Plus paid 183 million and150 million respectively or the rights,giving Uea a combined income o333 million, or 111 million per season,up rom about 56 million per season at

present. Te deal marked a new era or thecompetition in France, as rights-holder Uea,

European ootballs governing body, agreed orall live matches except the nal to be shownexclusively on pay-television or the rst time.

Te biggest deal in the UK over theperiod was the England and Wales Cricket

Boards renewal with pay-television operatorBSkyB, understood to be worth about

240 million (286 million/$377 million)over our years rom 2014 to 2017. Teamount was slightly down on the value o theECBs current deal, which expires in 2013.

Te second deal in France to makethe top 10 was Al Jazeeras 240 million,our-year deal with the Ligue de FootballProessionel, the French ootball league, ora package o live domestic rights or thetop-tier Ligue 1. Te deal covers pay-per-

view rights or six live Ligue 1 matches perweek, plus a weekly highlights show. AlJazeera is paying a urther 360 million inthe same cycle or two other live matchesper week under a deal with the league agreedlast year. Al Jazeera plans to launch two

pay-television channels in France this year.Concluding the top 10 is UK public-

service broadcaster the BBCs 41 million-per-year deal or Six Nations rugby unionrights. Te ee remained fat rom theprevious agreement and shed light on thebroadcasters priorities, as it implements a15-per-cent cut in its sports-rights budget.

THE TOP 10 DEALSDAN HORLOCKLOOKS AT THE MOST VALUABLE SPORTS RIGHTS DEALS SINCE SPORTEL MONACO 2011Top Ten Deals since Sportel Monaco 2011

Property SportTerritoriescovered Value

Duration(years) Buyer

1 NFL American Football US $27.9bn 9 CBS/Fox/NBC

2 MLB: Los Angeles Angels of Anaheim Baseball US $3bn 20 Fox Sports West

3 Fifa World Cup and other events Football US $1.1bn 8 Fox/Telemundo

4 Fifa World Cup and other events Football Asia* $600m 8 Infront Sports & Media

5 NCAA US College Sport US $500m 13 ESPN6 Italian Serie A Football International $460m 3 MP & Silva

7 Uefa Champions League Football France $436m 3 Al Jazeera/Canal Plus

8 England and Wales Cricket Board Cricket UK $377m 4 BSkyB

9 French Ligue 1 Football France $314m 4 Al Jazeera

10 Six Nations Rugby Union UK $257m 4 BBC

Based on the exhange ates on Januay 31: 1 = $1.31 / 1 = $1.57

*Deal exludes the makets of Japan, Koea and Malaysia.

SpORTEL BRIEfING| MArcH 2012



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upront guarantees or the IPL and CopaAmerica on Youube are understood tohave been about $1 million relativelysmall gures or live and internationalrights or top sports content. Given Appleand Googles standing in the smartphonemarket and need to push their televisionproducts, how close are they to rampingup their interest in sports rights, andcompeting or top-end content like EnglishPremier League domestic live rights?

Te evidence to date suggests that theworlds leading sports broadcasters are notunder threat rom Apples and Googlesbillions in the short term. Google looks mostlikely to acquire sports content, but onlywhere it can do so cheaply and the contentwill drive large audiences to Youube.

Youube is understood to be havingconversations with most major rights-holders.Te companys ocus is on live rig hts orpremium sports in territories where internetpenetration is high and so the potentialaudience large. However, it is thought tobe targeting rights valued with six or sevenzeros rather than eight, one insider said.

Te English Premier League rights inChina would all perectly into this bracket.Te rights are currently valued at $12 millionper year and have the potential to attract tenso millions o viewers. Streaming the matchesor ree on Youube in an advertising-undedbusiness model would be sensible businessor Google and could also be attractiveor the Premier League as it would meanwide exposure in a strategically-important

market. Especially considering the onlybroadcaster oering nationwide ree-to-aircoverage state broadcaster CCV isnotorious or paying low rights ees.

Googles recent recruitments suggest thatits appetite or sport is growing. StephenNuttall, ormer commercial director atBSkyB, joined in January as Youubessenior director or sport in the Europe,Middle East and Arica region. He will workalongside the likes o ormer Eurosporthead o business development omosGrace (strategic partner and developmentmanager o sport or Europe, Middle Eastand Arica) and ormer erra head o contentdistribution and Globosat head o contentsales and distribution Federico Goldenberg(content partnerships at Youube Brazil).

Apple is considered less likely to enter theraces or premium exclusive sports content.For a start, it has no online streamingplatorm like Youube. Apples iunes mediadownload service is a successul retail systembut is set-up or on-demand, not live content.

Tere are similarities in the twocompanies current business models thatsuggest the time is not rig ht or them to takea big step into sports content acquisition.

Both Apples and Googles televisionproducts are so ar targeting the video-on-demand market rather than the live contentmarket. As such, Apple V and Google Vare considered platorms that consumers usein addition to pay-television, rather thanoering an alternative to existing services.

wo digital media experts who have

worked closely with the companies saythat neither Google nor Apple is yet in aposition to challenge established televisionbroadcasters or exclusive premium pay-television sports rights in major markets.Both say that Apple and Goog les positionsin the mobile, tablet and connectedtelevision spaces mean the two alreadymake money rom live sports broadcastingwithout having to pay rights ees. Tereis as yet no need or them to make theleap rom being the partner o sportsbroadcasters to being their competitor.

Youube would be crazy to go aheadand compete with established broadcastersor high-value sports rights, competingagainst people that they are and should beworking with, said one. And why shouldthey pay to acquire second- or third-tiersports rights when they dont have to? Tebusiness model they have at the moment partnering with rights-holders andbroadcasters and giving them a revenueshare o advertising is a good one.

Te broadcasters remain in the bestposition to keep control o the sportsdistribution business, as the visionary onescontinue to grow their service oering toconsumers. Tey have existing rights andthey are in the best position to extendtheir reach to additional platorms.Adding a new platorm web, tablet,smartphone and even O (over-the-top television delivered via the internet) is less eort or them because theyrealready investing in the sports business.

SportBusiness International No.176 03.12


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11/15


Eurodata TV Worldwide

The only ofcial providero sport TV audiences

across all competitionsrom all over the world Order your Yearly Sport Key Facts

2011 issueincluding RWC, F1, UEFA CL

WE SPEAK TVContact:

Louis MAURAN, Head of Sport ServicesTel: +33(0) 1 47 58 36 56 - +33(0) 6 46 38 42 47

Email:[email protected] www.eurodatatv.com

will ensure that a certain number o matchesare shown on ree-to-air. Listed eventslegislation says that the nal and semi-nals

must be ree-to-air. Te French press hasreported that Uea would demand 19 matches

were shown ree-to-air. I the remainingmatches were on pay-television, the averageFrench audience would drop signicantly.

By selling Euro 2012 rights to Al Jazeerain France, Uea would also scupper anychance o beating the total average audiencerecord in the top European markets set in2004. I ree-to-air coverage in France ismaintained, the record could be challenged.

Te UK audience or the tournamentwill increase as the England team, whichmissed out on Euro 2008, has qualied.

Audiences or Euro 2008 in the UK droppedby 35 per cent compared to the previousevent thanks to Englands absence romthe tournament. Te cumulative averageacross Europe didnt drop signicantlyonly because o increased audiences inGermany and Spain as the respectivenational teams progressed to the nal.

t vr fiv er mr r u

er cm mmr om gm

(000s)

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5000

01992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Smme om gmes ue Een cmns

Source: Eurodata TV Worldwide/Mediametrie/AGF Fernsehforschung/Auditel/BARB/Kantar Media


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spoRts Rights-holdeRs and agenciespondering the uture o rights ees in sub-Saharan Arica should keep a close eye on three

projects currently underway in the region.Te pay-television sector, which

looked monopolised by pan-regionaloperator Supersport aer the withdrawalrom the market o would-be rivals GVand HiV, contains several ambitiousnew players, with the chasing pack ledby Chinese company Starimes.

In ree-to-air television, two agencies arepursuing two very dierent sales strategiesto generate ees rom a notoriously difcultsector. Te Sportve agency, selling the AricaCup o Nations and qualiers, has taken acontroversially hard line on rights ees withbroadcasters that are not used to paying or

rights. Te Octagon agency is going soer onrights ee demands, and boosting revenuesby taking control o advertising inventory.

Sub-Saharan Arica s recent economicdevelopment, and its population andnumber o television homes, point to huge

potential or rights ee growth. Te regioncontained six o the worlds 10 astest growingeconomies in 2000 to 2010 according to TeEconomist. It has 152 million households,o which only 37.5 million have a televisionand 7.5 million have pay-television.

However, the region still contains manyo the poorest and most corrupt countrieson earth, and the under-developed mediaindustries mean that securing good rightsees, and rights ee growth, is anythingbut guaranteed.

Rising staR

Starimes is the ocus o hope or growthin pay-television rights ees. European clubootball rights ees in particular soaredrom 2007 to 2009 when two pay-televisionoperators emerged to challenge Supersport,the dominant orce in the sector.

But the massive rights ee commitmentsmade by pan-regional operator GV andNigerian operator HiV proved too muchor the companies. GV went bust in2007. HiV withdrew rom the marketor top sports rights in 2010 aer havingdifculty making payments or its EnglishPremier League and Uea ChampionsLeague rights. Local press reports havesaid the company has subsequentlyexperienced urther nancial difculties.

ThEFrONTIErSMEN

keVin Mccullagh oN thE coMpaNiES

who could kick-Start rightS fEE

growth iN Sub-SaharaN africa.


Ge


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Starimes has shown more caution in therights market so ar. But it has played a rolein recent ee growth. It bid or pan-regional

rights or the English Premier League and theUea Champions League two o the regionsbiggest pay-television subscription drivers the last time they were sold. It only narrowlylost out to Supersport last year in the biddingor Champions League pay-television rights.

Starimes is one o a new breed opay-television operators in sub-SaharanArica trying to tap the market by oeringa low-cost service Stars typically costingaround $10 per month with a relativelysmall number o channels. Multichoice,Supersports parent company, has built itsbusiness on expensive subscriptions up to

over $60 per month and a larger selectiono channels. Multichoice last year ollowedthe new players into the low-cost market

with a new service called GoV, launchedin Kenya, Nigeria, Uganda and Zambia.

Multichoices small number o subscribersoutside its home territory o South Aricais indicative o the small size o the marketor expensive pay-television in the region.Te company had 5.2 millionsubscribers at the end o September2011, o which 3.7 million were inSouth Arica, and 1.5 million in therest o the region, o which around600,000 are thought to be in Nigeria.

One o the reasons or localindustry watchers condence thatStarimes will seriously challengeSupersport is the Chinese companysheavy inrastructure investment. It distributesits service on digital-terrestrial televisionnetworks which it builds itsel, and viaset-top boxes which it also builds itsel.

Starimes is the one credible competitorto Supersport, said one local agencyexecutive. Tey understand what it takes tosurvive in sub-Saharan Arica. Tey have theeconomic capacity. Tey are building theirown inrastructure. I anybody competes

with Supersport in Arica, it will be them.Star is not Multichoices only up-and-

coming pay-television rival in the region. InAngola, satellite service Zap V launchedin the rst quarter o 2010, joining DSVand cable operator V Cabo in the market,and had over 90,000 subscribers at the endo the second-quarter o 2011, paying anaverage o over $35 per month each. In EastArica, where the key territories includeKenya and Uganda, the Wananchi Group,

which owns cable-television platormZuku, plans to challenge Multichoicesdominance by launching a satellite

platorm. Satellite delivery will allow Zukuto reach more homes at a lower cost.

Supersport is not expected to bedislodged rom its position as the regionsstrongest sports broadcaster in the shortterm. Te good news or rights-holders isthat it has traditionally been aggressive inkeeping hold o its content, paying rights-ee increases to keep out would-be rivals.

fRee-to-aiR battles

Te Octagon agency is currently pursuing anexperimental sales strategy with the ree-to-air rights or the London 2012 Olympic

Games that it hopes will generate protsin a notoriously difcult market. Free-to-air broadcasters in the region generallyhave little money, and a reputation or lateand non-payment o rights ees. Octagonis selling the rights at relatively low pricesto maximize exposure, then topping upits revenues by selling advertising on the

pan-regional Olympics broadcast eed.

Octagon hopes to avoid the problemsthat the Sportve agency had in thelast year selling rights or the AricaCup o Nations ootball tournamentand its qualiers. Several broadcastersbalked at the prices Sportve was asking.Corporate sponsors and governmentsstepped in to help the broadcasters paythe ees, and the agency suered a stormo negative publicity in the local press.

Octagons model was pioneered by theagency and Fia, ootballs world governingbody, in the sale o the ree-to-air rightsor the 2010 ootball World Cup. Undera three-way deal, Fia and the AricanUnion o Broadcasters the pan-regionalconsortium o ree-to-air broadcasters worked together to sell the rights tobroadcasters, and Octagon sold advertisingtime on the World Cup broadcast eed.

Te agency sold a mixture o broadcast

sponsorship and 30-second spots toadvertisers. So drinks company Coca-Cola and mobile phone operator MN

acquired a mixture o both, whilepan-Arican bank Ecobank agreeda deal or 30-second spots only.

Octagon charged about $11,000 (8,400)or a 30-second spot on the pan-regionaleed. Audience measurement in the regionis unreliable, so airtime cost cannot be soldon the usual cost-per-thousand (viewers)standard. As one rights-holder said, deal

valuations are thereore oen seat o thepants stu. Octagon set the prices orits 2010 World Cup advertising spotsby surveying broadcasters rate cards oradvertising at the 2006 World Cup, and

drawing on its own experience representingcorporations advertising in the region.

Crucially or advertisers in such anunstable market, Octagon providedaccurate measurement o the amount oairtime exposure advertisers got during the

World Cup. Tis turned up some worryingresults or the agency, and the uture otheir model. Some broadcasters did not

ull commitments to show all thecentral advertisers advertisements.Te agency ended up having to paycompensation to the advertisers.

Te project was a success orFia, which is understood to havequadrupled its income rom theree-to-air rights in the region. It wasconsidered a success or broadcasters,

who got the rights at a low price, andalso beneted rom a Fia-unded training

programme in ootball television production.Fia used revenues rom the sales to payor workshops in match production andcommentary which were attended by over1,000 television industry proessionals.

Te project was not a total success orOctagon the agency is understood tohave at best broken even, partly because othe compensation paid to the advertisers.However, the sales were encouragingenough that it is pursuing the modelagain in the 2012 Olympics sales.

We know there is a market. Tereare pan-Arican brands crying out or

pan-Arican television exposure, saidJonathan Riley, Octagons head osales, broadcasting and media in theregion. We just have to make sure thebroadcasters comply with the agreementsto show centrally sold advertisements.

StarTimes understand what it takes to

survive in sub-Saharan Africa. If anybody

competes with Supersport in Africa,

it will be them.

SportBusiness International No.176 03.12


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oliVeR ciesla

MaNagiNg

dirEctor, thE

SportSMaN

MEdia group

philipp gRothe

chiEf ExEcutiVE,

kENtaro

geRaldine paMphile

SENior dirEctor,

iNtErNatioNal

MEdia diStributioN,

Nba aSia

spending on television rights is generallydirected more and more towards premiummust-have sports content that is o highdomestic demand and o global appeal.For premium sport, there remains strongcompetition in most markets and or premiumrights-holders, television income shows littlesign o decreasing despite the economic crisis.

In markets where this is not thecase, global rights-holders may stillnd that over-perorming emerging

markets elsewhere reduce any immediatenegative nancial impact.

A concentration o broadcasters budgetsand airtime on premium sports can, however,create difculties or second-tier rights-holders, who, as a consequence, risk sueringdiminished television income and exposure.

In response to reduced nancial oers rombroadcasters, creating tailor-made rights

packages or television and new mediaplatorms is key or rights-holders; their mediaoer must optimise the balance betweenrevenues and the best possible exposure orans, their own brand and their sponsors.

Alternative revenue sources can bedeveloped by ocusing on the broadexploitation o available video material,

video streaming on rights-holders ownplatorms, direct interaction with ansthrough social media, improved online-marketing and cost-efcient signal

production. Here the Sportsman MediaGroup and its sister company Laola1 provideinterconnected solutions out o one hand.

Moreover, streaming via internet andmobile devices increasingly oers a valuablesolution or premium rights-holders inconjunction with their television agreements,and to all other rights-holders as a valuableup-to-date alternative to television. Teoering o sports content across new media

platorms and its acceptance among ans,users and sponsors is growing rapidly.

the cuRRent econoMic situation inEurope is ocusing minds at all levels andacross all sectors. However, it is important tonote that the global sports rights market andKentaro or that matter has continued toenjoy positive growth across 2011, albeit ata rate lower than was experienced in LatinAmerica, the US, Arica and parts o Asia.

Te absolute value o broadcast rightsin Europe, especially within ootball,remains extremely high relative to the

other growth markets across the world and,other than certain US league properties,the bulk o income or sports media rightsstill comes rom Europe. Tis is unlikelyto change dramatically moving orward.

Much o the reason or this continuedgrowth is the strength o the very top

properties which consistently aim to reneand sharpen their product oering andbenet accordingly. As always, the processtends to be more challenging or thesmaller properties in difcult economictimes and oen it is the smaller sports or

which the eects o an economic slowdownare elt most, oen in the sponsorshipspace as well as within broadcast.

Broadly, I see no signicant change in theunderlying rate o growth in broadcast rights,as the bigger properties will need to continueto internationalise and innovate to remainat the top o the sports-rights tree. Tosethat do not have global appeal, however, willneed to be consistently more innovative innding ways to create new income streams.

I would never suggest that any rights-holder, sport or indeed business will everbe totally immune rom the eects o aneconomic slowdown; but those who are mostcreative, innovative and orward-thinkingin their strategic approach will surely havethe best opportunity to grow and, indeed,exploit the many opportunities an uncertaineconomic outlook so oen brings.

MajoR Rights-holdeRs should maintainmost o their value. Minor sports do notrely on television revenue to anygreat extent so it is those in themiddle who will be squeezed.

At the National Basketball Associationwe ocus on deep, longer-term partnershipswith broadcasters, that give them a largesay in how the property is scheduled andmarketed. We have also made a solid localcommitment we have multiple ofces

worldwide including a Europe-wide presence which supports the growth o the NBA.

o minimise losses, rights-holders needto integrate in their media strategies thetrends and the changes in the consumptionhabits o ans and an understanding o thetelevision industrys adoption o digital.Tis migration is gradual, but has a deep-seated impact on the industry. Te NBA,or example, has robust digital assets in nba.com and nba.tv our direct-to-consumer

portal which are both destinations ochoice or our ans. Tey provide excellentcomplementarity to our television oer andare great platorms or global partners.

No-one is immune to the economiccrisis. But a slower rate o growth in mediarevenues does not imply that growth or aleague or a property as a whole will slowdown. Sports properties should buildsustainable businesses that spread acrossseveral business lines: media rights,sponsorship, events, merchandising andso orth. It is important to build andmaintain the local afnity o the sport viainitiatives like grassroots operations wherethe public can interact with the game.Each season, we organise internationalevents, rom overseas pre-season andregular-season games which Europehas been hosting since 1985 to clinics

where NBA players, coaches and doctorsprovide NBA expertise or local athletes.

Streaming via internet and

mobile devices increasingly

offers a valuable solution.

Those who are most creative,

and forward-thinking will have

the best opportunity to grow.

Rights-holders need to integrate

in media strategies changes in

the consumption habits of fans.


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