Football pitch hots up

The EU has broken Sky’s stranglehold on top-flight football coverage, opening the door for Irish minnow Setanta, Virgin Media, BT and Freeview to pitch for the rights to live matches. Catherine Turner reports on David v Goliath battles that could transform sports broadcasting

Setanta%20sport%20120pxThe fortunes of Chelsea, Manchester United and Arsenal may have fluctuated during the history of the Premiership, but BSkyB’s stranglehold on live TV rights has remained constant.

Until now. The European Union’s abolition of Sky’s exclusive rights to the Barclays Premier League has allowed Irish upstart Setanta to take a piece of the football action from this season. It will show 46 live matches a season over three years, as opposed to Sky’s 96 games.

Des%20LynamThe pre-season marketing push has seen Setanta spend more than £5m on a campaign, starring former Match of the Day presenter Des Lynam, to highlight its little-known brand in the UK. Meanwhile, Sky Sports has a slick campaign featuring star players from past and present.

“Heroes come and go – our passion is forever,” runs the Sky campaign, which is being backed by some tactical advertising.

Sky, with its expertise and deep pockets, has home advantage, while Setanta – better known north of the border for its Scottish Premier League coverage – is looking to cause an upset. Indeed, the off-the-field clash, which also involves Virgin Media, BT and Freeview, could define the whole season.

Few believe Setanta’s offensive will drastically harm Sky’s bottom line, although some suggest that the way it is nibbling away at Sky’s position indicates just how competitive and potentially lucrative the market is becoming.

Setanta owes its position to the European Union’s insistence that no single broadcaster should hold the rights to the Premier League.

The EU’s problem with the sale of Premier League media rights surfaced in 2001 with a probe by the European Commission (EC). It charged the league with breaking competition law in 2002 and the 2003 rights were structured differently.

However, Sky won all four tiered rights packages, leaving the EC unhappy and claiming the league had “serious questions” to answer.

Rights auction
Sky’s stranglehold on the league was finally abolished in the auction for rights from this season, and it is limited to a maximum five of six packages. It eventually walked away with four packages (96 games) at a cost of £1.31bn – or £4.76m per game over three years. Setanta paid £392m for 46 live matches – or £2.82m per game.

Setanta, which formed to air an Irish football match in a London pub during the 1990 World Cup, has been steadily pipping its larger rival to other sporting rights. It partnered with ITV to snatch the FA Cup away from a BBC/Sky partnership from next season.

Yet all this comes at a cost/ £425m (shared with ITV) for the FA Cup, £13.625m a year for the Scottish Premier League and £103m for six years of the PGA US Tour.

Critics suggest this is too much for a broadcaster which has not yet proved itself with subscriptions or service. Setanta replies that it has heavyweight backing from the likes of investment bank Goldman Sachs and a business plan built for “the long term”.

It even believes that, come the next round of auctions, the model could survive with just one of the six packages. Co-founder Michael O’Rourke says: “God forbid we only end up with one [Premier League package] – we would prefer two, but we would still have a range of other content.

“The experience throughout Europe is that customers come for the sport but stay. Sky has lost a whole series of sporting content, but you don’t see their subscribers going down.”

Football%20arenaSubscription service
There are mutterings that Setanta is struggling to sign up customers – a suggestion disputed by a source close to the company, although the 1.4 million on Virgin’s XL will have helped. He says that when it went to market in March it expected to have 900,000 subscriptions by the end of the year, but now says it already has 2.5 million before the season has even started. This week it also announced the launch of subscription service Setanta by Broadband.

Others point to the differing price points across the platforms, with different numbers of channels on each (you only get one on Freeview for £9.99, the same price on other platforms with more channels), suggesting that it is not truly “platform neutral”, one of Setanta’s claims.

However, Setanta marketing director Timothy Ryan explains: “What we’re doing with the Premier League is saying that our action is under £10 a month: nothing can compare to it.”

But does not stop there. While Setanta publicly concedes it cannot hope to scalp Sky by taking away subscriptions, it aims to tap into new markets and become a bolt-on for die-hard fans.

Sky, meanwhile, is trumpeting its credentials, piling on the history and heritage while touting 2007 as its “biggest season ever”. Despite losing a third of the rights, it is showing more games than in seasons past.

Sky director of brand strategy and marketing Robert Tansey says: “If you want the best coverage then Sky is the trusted partner. We have been pacesetters and standard bearers.”

Yet there are not only two competitors in this match. Throw in cable platform Virgin Media, newcomer IPTV provider BT Vision and DTT platform Freeview, all offering sporting action, and the situation becomes more complicated. Indeed, a large part of Sky’s campaign – and that of rivals Virgin Media and BT – has been denouncing the value of other services compared with its own.

Setanta sells itself as “platform neutral” as its channels will be available on all four services, including the first premium sports content on Freeview. Sky provides content to its own subscribers and Virgin Media’s.

Plans to launch a pay-TV sports service on Freeview this summer were scotched by media regulator Ofcom. It is investigating Sky’s proposals and is not expected to report back until early next year (MW June 28).

Such a delay should favour Setanta – giving it a clear run at the Freeview market in the first half of the season. Ryan says: “Timing and market circumstances have worked in our favour, but part of success is about being able to capitalise on that.”

Meanwhile Virgin Media has struck a deal with Setanta, offering its portfolio of seven channels free to XL TV customers (with certain restrictive conditions) – and BT Vision believes its on-demand and subscription packages, as well as “near-live” football action, mean “ordinary fans aren’t priced out of the action”.

Virgin Media is also muscling in on the burgeoning online arena, offering exclusive highlights from all Barclays Premier League, Coca-Cola Championship, League 1 and League 2 matches, and pitching itself as the true fan’s friend.

This is all different territory for Sky, which has built much of its business on offering exclusive, premium content (6 million of its 8 million-plus subscribers take a sports service).

Its exclusive snaring of Premier League rights helped it build a formidable business bolstered by other premium content deals. But the goalposts have moved, and although few would bet against Sky taking the trophy, Setanta could well score a few valuable points with fans and advertisers alike.

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