Subscribe Online  

Football the winner as indies and viewers await impact

Blog
11 February 2015

£11m per match. That’s how much Sky is paying for the rights to broadcast each of the 126 games under its new deal with the Premier League.

For the cost of just 90 minutes of football, Sky could produce plenty of dramas, comedy, entertainment and factual shows.

At current tariff levels, £10m would comfortably pay for eight hours or more of a high quality drama series - to which Sky would retain a significant portion of the rights to exploit in international markets.

Many analysts and the market think that Sky has overpaid. Sky’s share price fell by 5% this morning, the biggest faller in the FTSE 100, as the market digested the £4.176bn it is paying over three years, an 83% increase over the cost of the existing contract.

BT’s shares, by contrast, were up by more than 4pc in early trading on Wednesday. It will pay a total of £960m compared to £738m for two packages, which is £7.6m on a per game basis.

Sky, of course, was in a difficult negotiating spot – and they have won a painful victory for the rights. Premiership football is still the main driver for pay-TV subscriptions. 60% of subscribers say they would consider to switching to a rival if it won the bulk of the rights, according to a recent of Ofcom report – way above any other sport or genre.

Sky admitted that the annual cost of the Premier League rights would be around £330 million more than analysts’ forecasts.

The broadcaster admitted that the increased outlay on football means that it will have to make “substantial additional savings to be delivered by efficiency plans.”

Sky chief executive Jeremy Darroch says that the broadcaster has “a clear plan to absorb the cost of the new Premier League deal while delivering our financial plans.”

The price rise has already raised speculation that the broadcaster will have to pass on the increased costs to their customers by charging more.

Ian Whittaker, an analyst at Liberum, told The Financial Times that if Sky passed the whole increase in rights costs on to consumers, rather than make cuts, bills would increase by more than 10 per cent.

Savings might also be found by cutting expenditure on original programming, which could have a significant impact on the UK production community.

Sky is now a major investor in UK content. It recently spent £25m on high-end drama Fortitude as part of its plan to broaden its offering to consumers, and to compete with OTT players like Netflix and Amazon.

But after the new Premier League deal it’s reasonable to expect that Sky won’t be commissioning quite so many of these kinds of shows in coming years.

Footballers rather than indie producers are the winners this week.




Be the first to comment.
 

Recent Post By This Author

Archives

Subscribe






















Televisual Media UK Ltd Golden Cross House, 8 Duncannon Street, London, WC2N 4JF Tel +44 (0)20 3008 5750
©2009 - 2017 Televisual. All rights reserved
Use of this website signifies your agreement to the Terms of Use | Disclaimer