European sports broadcasters can breathe easier, says S&P

Sky, BT and other sports broadcaster should breath easier about keeping hold of football and other TV rights in the short term, says rating agency S&P Global, but further out they are at increasing risk from the big internet firms.

Earlier in the year Sky paid £199m less per year for Premier League broadcast rights and a 16% cost reduction per game to £9.3m, while BT agreed to fork out £25m less per season but its cost per game rose 21% to £9.2m. Last year, BT paid 33% more for Champions League and Europa League rights.

S&P said these broadcasting rights are a "material profitability driver" for broadcasters and pay-TV operators and sees premium sports programming, including football, "increasingly" likely to move to internet-based over-the-top (OTT) platforms, such as Netflix, Amazon, Facebook or Twitter, which it had been suggested might bid in the recent English Premier League auction.

However, despite their huge size, there is uncertainty for these internet around how to monetise investment into sports rights, as well as country-specific challenges that, says S&P, offset their scale and financial firepower to outbid national carriers.

"They also lack the necessary television production services to successfully cover live European football. This leads us to expect that any shift will be slow, and unlikely to prove disruptive over the next five years."

Moreover, while European football leagues surely will like the colour of big internet's money, as established brands their focus may be more on increasing their "total market value and appeal", and so S&P suggested they may not be tempted into accepting the highest bid, particularly if they felt that it might affect their market reach and exposure.

The acquisition of exclusive football rights could add complexities to the internet company's pricing strategies, which currently focus on affordability.

"In our opinion, OTT providers and internet companies may eventually develop the sufficient production expertise and market knowledge to disrupt the current dominance of traditional broadcasters and TV operators over European football leagues' rights. This disruption could materially change the structure of European football rights auctions and the competitive landscape of the market."