SportBusiness International Insights: The New Guard

In the sports broadcasting industry, you never have to wait too long before one of the world’s biggest sports properties announces a mega multi-million dollar TV deal.

For sport’s elite leagues and competitions, income from media rights appears to be on an inexorable upward curve. And in the last 18 months, some of the world’s biggest multi-national media organisations have made significant moves in the sports broadcasting sector. This will perpetuate the growth further into the future as competition for key sports content between the new entrants and established broadcasters drives up rights values.

Some examples, amongst many: Al Jazeera has spread its wings beyond its Middle East homeland to North America and Europe; Fox has moved aggressively into Latin America and consolidated its position in the Asia-Pacific region, as well as making moves to wrestle market share away from ESPN and NBC in the US; and at a more micro-level, national media companies, most notably telcos, have entered the sports broadcasting space – BT Vision in the UK and Cable Thai Holdings in Thailand are two noteworthy cases.

There is good reason for these strategic plays. The appeal of sport - and its importance for content buyers – continues to be shown as it is one of very few types of content which aggregates mass audiences against the proliferation of new TV channels and the increasing number of other media platforms splitting the attention of consumers.

Sport’s significance as a TV product has been emphasised during the economic downturn. Sports content, amongst other genres, became ever more valuable to broadcasters as consumers, faced with squeezed household incomes, stayed at home for entertainment and indeed held onto their pay-TV subscriptions. And pay-TV, whether it be its emergence in developing markets or continued growth in developed markets, has helped the major rights-holders increase their revenues significantly.

Given the cyclical nature of the sports TV business - deals are signed on average for three to five years in most markets outside the US - there is a recurring potential window of opportunity for new entrants to make a land grab for key sports content.

Clearly the cost of entry in the more developed markets is prohibitive and few are well-funded enough to make the leap. But a number of telcos and other media conglomerates, which have deep pockets thanks to other core businesses, have shown it is in their interest to spend heavily on sports rights to safeguard their traditional market position. Take BT in the UK - given that BSkyB was stealing significant ground in the broadband market, BT was forced to take BSkyB on at its own game, prompting its bid for English Premier League (pictured) football rights. There are plenty of other telcos in the same position.

In smaller markets or less advanced media landscapes meanwhile, similar opportunities are available and SportBusiness Intelligence has worked with a number of broadcasters creating roadmaps for entry strategies across the world.
Providing insight and monitoring changes in the broadcast landscape - following the arrival of new entrants and the impact it is having on the valuation of sports media rights - is something that SportBusiness Intelligence also offers rights-holders as they look to become more and more sophisticated with their international sales efforts.

While only a handful of properties – those sports that drive subscription revenues for broadcasters in significant numbers – tend to benefit from massive multi-million dollar increases in markets where a new entrant rears its head, there is still a ripple effect for other sports events. With new broadcasters come new schedules to fill and second-tier sports can sometimes take advantage from the competitive edge in a market. Not least, rights-holders looking to broaden their international reach beyond their traditional homelands can also tap into new markets where previously they were unseen.

So while the big rights-holders will continue to take the headline grabbing deals, the rise of new sports broadcasters around the world is helping sustain the buoyant sports media market for a significant number of other sports events.

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