Pauline McVey, analyst for SportBusiness Intelligence, looks at televised sport in Russia and considers the impact of the decision by the Russian Premier League to launch its own football channel.
The Russian Premier League's decision to create its own channel is the most significant development in the Russian sports media landscape in recent years. Making the bold move ahead of the 2012/13 season following unsatisfactory negotiations with state broadcaster VGTRK and the Infront Sports & Media agency, the league decided to try and tap into the growing pay-TV market, one which increased its total revenues by 20 per cent in 2011.
Believing it could enhance its reach and generate more revenue for itself from the 55 million TV households in Russia, the new league channel - which shows all games live - enables the league to better control its domestic rights whilst also retaining a relationship with previous principal live rights-holder, commercial and pay-TV broadcaster NTV.
The league agreed a three-year deal with NTV, from 2012/13 to 2014/15, which includes free-to-air rights to one match per week, exclusive pay-internet rights to all matches and crucially for the distribution of the new league-owned channel, a fixed carriage fee for the channel on the NTV Plus satellite platform. Additionally, NTV will be responsible for the league’s TV production.
Under the previous deal, for the elongated 2011/12 season - the Russian Premier League changed its calendar to operate on the autumn-spring schedule favoured by the majority of its European counterparts - NTV Plus created a specialist league channel which it made available on its own platform, but struggled to secure wider distribution on other platforms as its competitors were reluctant to make such deal with a rival.
Increasing its exposure was one of the league’s main motivations in creating its own offering and by taking 100 per cent ownership of the new channel, it has been able to successfully negotiate carriage deals, on a revenue-share basis, with major players satellite platform Tricolor, and cable-TV operators MTS and Rostelecom, plus a number of other providers, making the channel available in around 20 million homes.
However, the league and its distribution partners still face a difficult task in convincing customers to sign up en masse to the standalone service, which customers must pay an additional fee for - 149 roubles (just under $5) per month -on top of their existing pay-TV subscription.
Though the Russian pay-TV market has experienced a period of growth - figures for the third-quarter of 2012 show year-on-year growth of 18.3 per cent - the rising revenues are driven primarily by the volume of new subscribers, rather than any significant increases in people taking up premium subscription products, like the league channel.
While the new league-owned channel inherited the existing subscriber base of the NTV Plus channel, understood to be between 100,000 and 300,000 subscribers, the league believes it can add 500,000 to one million subscribers by the end of its first season under the new broadcast arrangements. However in a pay-TV market that has thus far shown a muted appetite for top-up services, it remains to be seen whether or not the league has been somewhat optimistic in its projections.
For state broadcaster VGTRK, the launch of the new channel was a blow, having broadcast live matches previously. Football is the most popular sport in Russia so the loss of domestic league coverage is significant. However, it has since bounced back with the acquisition of Olympic Games rights for 2014 and 2016.
Following months of unsuccessful negotiations with the International Olympics Committee (IOC)’s sales agent, the Sportfive agency, a deal was finally agreed in September last year with the consortium of free-to-air broadcasters VGTRK and Channel One, NTV Plus, the pay-TV arm of NTV and RIA Novosti, Russia’s largest news agency.
After a stand-off over Sportfive’s initial asking price, the deal was finally concluded with the involvement of Russian government officials which included a state-contribution of around half the agreed rights fee.
State intervention in sports rights deals is not uncommon in Russia. In 2007, president Vladimir Putin directed the Russian Premier League to make more games available on free-to-air following the league’s exclusive deal with pay-TV broadcaster NTV Plus.