Why EPL media rights value dropped for second time in a row

MUMBAI: The consolidation in the sports broadcast space with Sony buying Ten Sports from ZEEL is proving to be a challenge for sports bodies. A case in point is the English Premier League (EPL).

As has been reported earlier, Star Sports renewed the TV and digital rights deal for the Premier League for another three years till 2022. Star Sports will broadcast more than 250 Premier League games live across the network and beam all 380 games live on Hotstar.

However, it has been learnt that the deal value has once again seen a deflation. This time around, the drop in the value is to the tune of around 25%. The earlier three-year deal was worth $99 million or $33 million/year. This was a reduction from the $145 million that Star Sports’ predecessor ESPN Star Sports (ESS) had paid for the previous three-year deal.

An industry source noted that one of the key reasons for the drop EPL pricing is the consolidation in the sports broadcasting industry. Currently, there are only two major players in the sports broadcast market, Star India and Sony Pictures Networks India (SPNI).

“Like the previous rights cycle, Sony showed little interest this time around as well. Their plate is already full when it comes to soccer with properties like the FIFA and Champions League. That left only Star. When multiple broadcasters vie for a property then you can expect the rights value to rise. But with fewer broadcasters, the price gets affected. Having said last season saw decent traction for the league given that there was a World Cup,” the source stated.

According to the source, another reason for the price deflation is that Star’s main focus has been on cricket with the Indian Premier League (IPL), India cricket (BCCI) and the ICC rights.

“So there is less focus on going after smaller events by paying over the top dollar. On the soccer front, Star is focusing a lot on the Indian Super League (ISL). Also you have to look at the scope for growing subscription revenue when you bid for soccer. The scope for advertising is limited,” the source added.

The source noted that price depends on the desperation of the parties. “You saw a lot of desperation during the IPL rights. But with the EPL there wasn’t that much desperation. Star wanted to retain it but only at a certain price.”

Media Partners Asia VP Mihir Shah noted that under the new tariff order (NTO), sports properties that have not gained popularity will see a correction. He noted that a competitive landscape is always critical for driving up media rights value.

“With ZEEL’s exit, India’s sports market is a duopoly, with both Star India and Sony having enough sports content to play with. Moreover, given the cost-control mandate under the new tariff regime, sporting properties which have not gained popularity will stand to correct.”

Media Partners Asia senior analyst Srivathsan AR further noted that the EPL remains the most valued international sports property outside of cricket with a young and metro-centric fanbase.

“However, Star’s committed investments in premium cricket rights and local leagues such as the Pro Kabaddi League has necessitated a price correction for other premium rights. EPL and its clubs target India as a key growth market globally for fan following and hence should be happy to continue their partnership with Star given the broadcaster’s distribution might on TV and digital (via Hotstar) as well as the company’s marketing capabilities. As local leagues continue to gain audiences, the media rights for international properties will moderate in the medium term.”

Shah stated that the correction in media rights is expected to extend to cricket as well. Weaker cricket boards are expected to bear brunt of the price correction.

“Passionate fan bases along with an evolved content distribution system have driven up values for media rights in India, followed by Australia and England. These trends have not played out evenly across all cricket playing nations. Media rights values for established cricket nations like Sri Lanka and West Indies are expected to experience a correction in upcoming renewal cycles. This could disrupt the functioning of cricket boards in these countries and subsequently, impact competitiveness within the international game,” said Shah.

Another source noted that there are some sports properties which inflated in value beyond what is realistic from a broadcaster’s P&L perspective and now a settling down is going on.

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