Can broadcasters make football pay?

Football TV audiences are falling, yet British broadcasters spent £2.3bn last week to buy the rights to televise top class English games for just three years. Are they paying over the odds?

FOOTBALL’S NEW OWNERS

PREMIER LEAGUE – £1.645bn (starts June 2001)

– BSkyB – 66 live games – £1.11bn (plus a minimum £22.5m per season for interactive services)

– NTL – 40 pay-per-view games – £328m

– ITV- two highlights packages to start before 10.30pm (Saturday and Sunday) £183m.

– The Premier League is also, according to chief executive Richard Scudamore, ‘resolving’ the overseas rights plus those for mobile telephony, the club channels, video-on-demand sub-licences and radio.

Previous deal – BSkyB paid £670m for a four-year contract.

The BBC paid £73m for the highlights package. Ends May 2001.

FA CUP & ENGLAND INTERNATIONALS – £400m

Joint deal between BBC and BSkyB. The BBC will broadcast two

live games from the third round onwards plus one of the semi-finals

exclusively and will share live coverage of the final with Sky.

BSkyB will broadcast two live games from the opening round onwards. BBC has first choice of the live FA cup ties. BSkyB has the rights to all England’s home internationals while the BBC will be able to broadcast all ‘competitive’ games simultaneously.

Previous deal – £130m paid by BSkyB and ITV for four-year deal.

FOOTBALL LEAGUE & WORTHINGTON CUP – £315m

ONdigital will screen 88 live games from the first, second and third

divisions plus the Worthington Cup. ITV will show four live games nationally including the Worthington Cup final and the first division

play-off. ITV will also screen 15 regional live matches during a season.

A series of pay-per-view matches are also being negotiated.

ONdigital is paying the lion’s share – estimated at £265m.

Previous deal – £150m paid by BSkyB for live Football League games. ITV had access to Worthington Cup.

Motty was “gutted”. Gary Lineker was almost in tears. NTL declared itself over the moon and Greg Dyke looked sick as a parrot – even when he was holding the FA Cup aloft outside Broadcasting House – but that might have had more to do with the £120m price tag he had just paid in a vain attempt to re-establish the BBC’s reputation for live sport.

Meanwhile, ITV was quietly satisfied at dealing a fatal blow to Match of the Day even if most people believe that in paying £183m it has paid over the odds for Premiership highlights.

Last week’s shake-up of football TV rights was, on the surface, the most radical the UK has ever seen. The fact that only NTL of all the winners is not currently producing football programming suggests that the shake-up is less radical than it first appears. But between them, British broadcasters spent £2.3bn last week to buy the rights to televise English football for just three years from June 2001 to May 2004.

But what have these companies actually bought and who will pick up the bill?

Advertisers? Football has become such a premium TV sport that some advertisers have been priced out of the market and others might baulk at being asked to pay any more.

Subscribers? Pay-TV broadcasters have to be careful not to increase prices to a level where the loss of subscribers through churn outweighs the benefit of having football in the first place – especially as this deal brings to an end Sky’s nine-year exclusive hold on live Premiership football.

“They [the broadcasters] will need to pass some of this extra money on to the advertisers – the market will accept a certain amount of increase – but there are only a certain number of advertisers who want to attract the consumers brought in by football,” says one media buyer.

MediaVest broadcast director Nick Theakstone is more blunt. He says: “ITV needed to win the bidding for the highlights to give it more young male audiences but it will not be able to charge premium ad rates – this is not a major sporting event – it is a week in and week out show where everybody already knows the results.”

“ITV has over paid, it needed to do the deal but will have to recoup some of the money from a sponsorship deal rather than passing it on to advertisers.”

ITV commercial and marketing director John Hardie says advertisers should “celebrate” the news. “I don’t think we have over paid. The sponsorship will cover a big area – we’ve already had e-mails from people wanting to sponsor the programme.”

Ironically, another source of income to offset the cost will come from the deals struck to guarantee that football is available across all pay-TV platforms. ONdigital has an existing contract with BSkyB to broadcast Premiership football on its digital terrestrial platform. “The price [that ONdigital has to pay Sky] is always a sensitive issue,” says an ONdigital spokesman. He refused to reveal how much changes hands, “our contract with Sky runs for several years and if it feels it has a case for increasing the price then I am sure Sky will put that case to us.”

There is no doubt that Sky will put that case forward and in the near future.

The wildcard in all of these deals is the £328m pay-per-view deal struck by NTL. The cable company also bid for the main Premiership rights but lost out to Sky. Only three previous pay-per-view football matches have been shown in the UK and the £328m investment in an unproven system is seen by many observers as a gamble.

“That is an unusual way of viewing it,” says NTL group marketing director Mike Hounsell. “We are delighted – we got what we wanted. The reason we are so thrilled is that there will now be two sorts of football on TV – Sky’s bundle and live football on NTL where you can choose which game you want. People are getting frustrated paying – through subscription – for matches they do not want.’

But scheduling could force NTL’s pay-per-view games to midday or 1pm on a Sunday afternoon – not the most attractive slot. “We will be marketing this on a national basis and across all platforms – not just cable but also satellite and through ONdigital. This is just one piece of the jigsaw that also includes telephony and the Internet – this is not the be-all and end-all. But we are looking at options for things like season tickets to all the games – anything that will make it more mass-market.”

All of this is happening at a time when according to some sources football TV audiences are falling. TV Sports Markets magazine has calculated, basing its findings on BARB figures, that the number of viewers for Premiership football on Sky dropped by 14.2 per cent in the season just finished. The broadcaster says that the figures do not take into account subscribers to its Sky Sports Extra channel – which offers a digital interactive service – but admits that the viewing figures dropped by between seven and eight per cent last season. It blames the fall on a combination of factors including more European games forcing Sky to broadcast more Premiership games on a Saturday morning and also the fact that Manchester United had won the title by April removing any drama from the run-in.

But TV Sports Markets also found that there was a drop in viewers for ITV’s Champions League coverage (probably because of more games reducing the average audience), the FA Cup on both ITV and Sky and also a fall off in numbers watching the Worthington Cup on Sky. The only competition where it saw growth in viewing figures was the Nationwide League – 4.8 per cent up on the previous year. None of these figures included Sky Sports Extra and are not proof that TV audiences have fallen out of love with football. But perhaps they should serve as a warning to those spending more money for something that may show less of a return.

The wisdom of the broadcasters decision in paying more than £2.3bn for top class English football will become clear over the next four years. BSkyB had to win TV rights, to maintain its development and position. Others such as ONdigital and NTL need them to maintain growth. ITV will gain younger male audiences. And the BBC has guaranteed that it will not have to cancel Grandstand on FA Cup final day 2002. But whether they can make football pay is another question.

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