14 Aug 2018

Screening rights: Underdog makes the big league

From Mediawatch, 12:10 pm on 14 August 2018

Telco Spark has scored English football rights that were part of the package at Sky TV for years. Mediawatch looks at how the EPL has become a political football in the increasingly competitive subscription viewing game.

Leicester manager Claudio Ranieri is reflected in the silver as he kisses the EPL trophy.

Leicester manager Claudio Ranieri is reflected in the silver as he kisses the EPL trophy. Photo: PHOTOSPORT

The English Premier League was designed back in 1992 specifically to sell pay-TV subscriptions and turn Rupert Murdoch’s BSkyB company into a major money-spinner in the United Kingdom.

The ownership of live rights to screen it here are also a gauge of the state of play in New Zealand’s market.

For most of the past 25 years, the EPL has been part of the portfolio of premium sport that’s persuaded hundreds of thousands of Kiwi households to pay Sky TV around $80 a month for content, including stuff they never watch.

It was a big surprise when a new kid on the block - online operator Coliseum - outbid Sky for three years of EPL rights in 2013.  

Subscribers who expected soccer on their Sky slate - along with everything else they paid for - squealed loudly, but Sky shrugged it off.

The EPL is nowhere near as important to Sky as live rugby and cricket. Those rights are the core of Sky TV’s business and are locked up until 2021. 

Longtime chief executive John Fellet pointed out most matches were in the middle of the night and EPL viewing was a tiny fraction of viewers’ total sport watching.

He said Coliseum had paid too much, and over-estimated punters’ preparedness to pay for a single sport.

Sky TV's chief executive John Fellet talking to RNZ's Colin Peacock.

Sky TV's chief executive John Fellet talking to RNZ's Colin Peacock. Photo: RNZ / Francesca Emms

He was right - and flaky broadband connections also frustrated many who did shell out.

In 2014, Coliseum came under the umbrella of Spark as part of the then-new on-demand platform Lightbox Sports.

It shared the rights - and costs - with TVNZ for one season but the bold bid to build a customer base from selected online-only streamed sports ultimately failed. 

However, some media industry pundits reckoned Sky was playing another game too.

The company’s contracts with content providers were under investigation in 2013 and its market power was being questioned. Calls for regulation to clip its wings were growing.

By letting EPL rights go, it created a ‘tall dwarf’ according to telecoms lawyer Michael Wigley.

“This strategy involves ensuring there are minnow competitors in the market that give the appearance of competition, with little risk of growing bigger," he wrote in 2013.

Selecting providers that will remain minnows was the key, he said.   

Sky’s Fellet said that was nonsense but later that year Wigley reckoned it had worked when the Commerce Commission cited the deal to broadcast the EPL live online as one reasons not to prosecute “near-monopoly” Sky TV for past breaches of the Commerce Act.  

The New Zealand rights for the EPL from 2016-2019 were secured by beIN sports, a subsidiary of the Al Jazeera network, as part of a wider Asia-Pacific broadcast plan. With no New Zealand deal in place, beIN did a deal with Sky to use their platform to broadcast the games.

Normal service had resumed - sort of.

Streaming on the rise

But now that the 2019-2022 rights have been secured by Spark, it seems a younger dwarf has grown taller, older and wiser.

Spark has recruited a seasoned TV executive - TVNZ’s former head of television Jeff Latch - to run newly minted Spark Sport.

Some of the same risks Coliseum faced five years ago still exist. Many viewers are still used to turning on their TV sets rather than a PC or a mobile to see the big match. A worthwhile return on investment is not guaranteed. 

But some pundits believe Spark’s online-only live coverage of the Rugby World Cup in 2019 could be the moment when enough people flick the switch from watching on broadcast TV - and paying Sky if necessary - to finally get comfortable with streaming their sport online. More households will have smart TVs which remove that hurdle altogether.

If Spark gets its RWC 2019 package right - financially and technically - the EPL offering could piggyback off that.

These are developments that make it quite clear why Sky invested so much time and effort last year in a proposed merger with Vodafone in which it would have been the junior partner.  

This time, it didn't get the result it wanted from the Commerce Commission.   

On its own, live football in the middle of the night from England is not going to make Spark Sport - or break Sky Sport - but at a time when the stature of the big beast of pay TV is shrivelling, a former minnow in the market is clearly a dwarf no longer.