Amazon and Facebook make racket with bids to show live sports
In August of this year, Amazon beat Sky to purchase the UK rights to broadcast the ATP World Tour. It has been reported that Amazon paid as much as $10 million a year for the right to show all men’s tennis outside of the four Grand Slams within the UK. Amazon will stream the tennis live as part of its Prime subscription service.
The next month, the Indian Premier League (“IPL”) held a tender to sell its media rights for the next 5 years. Although the amount of the winning submission is noteworthy, Star India will pay $2.5 billion over the next 5 years for a global package that includes both broadcast and streaming rights, it was the bid by another company that caught the media and the public’s attention. This was Facebook’s bid of over $600 million for the right to stream the tournament live in India and the surrounding region. Despite not winning the rights, Facebook’s attempt is added evidence of the seriousness with which the major non-traditional media companies are taking their pursuit live sports.
These bids, by companies that intend to stream their content, have been made possible by improvements in technology and a change in the way people view sport. They have also raised some key legal and commercial issues for media rights holders and those that bid on them. Amongst them are:
Increased competition = higher prices?
No longer happy with being the “second screen” for live sports events, the tech giants are now looking to take on the traditional broadcasters for the rights to show live content. Ed Woodward, the Vice Chairman of Manchester United Football Club, expects the likes of Amazon and Facebook to bid for the right to show the Premier League during the next round of right sales. These new players in the market may well drive up prices. Already seen by some as loss leaders, it will be interesting to see how much higher media rights go before they become unsustainable.
Piracy and the protection of intellectual property
One key issue that technological advancement and the proliferation of availability of authorised streams has led to is piracy. A recent survey carried out by SMG Insight found that over half of eighteen to 24-year olds in the UK had watched an illegal stream of a Premier League football match.
The Premier League in England has started fighting back. Over the summer, it was awarded a renewed High Court order (first issued in March 2017) which allows it to work with Internet Service Providers in the UK to block servers that are hosting illegal streams of Premier League matches.
Within contractual agreements, sports broadcasters, especially those in key territories, will need to consider ensuring that rights holders have clear and unambiguous rights to terminate contracts with other broadcasters whose products are repeatedly shown to be the source of illegal streams.
In recent years, rights holders have become more sophisticated when selling their media rights. In individual agreements they “reserve rights”, excluding them from the sale. This allows them to sell these reserved rights to different partners. The theory is that these individual arrangements will add up to more than the whole.
Again, as technology advances, the list of rights reserved by these entities expands. For example, it is now common for sports rights holders to separately license to betting operators the right to broadcast “live” (with a built-in delay) on the operators’ mobile or online offering. Restrictions on the quality, size and time delay are incorporated into these agreements in order to not encroach on other broadcasters’ rights.
This has undoubtedly added complexity to these agreements and it is important for those buying rights to ensure they know exactly what they are getting and how it will be protected.
There is also some debate as to whether these increased numbers of additional reserved rights do indeed lead to greater revenue for the right holders or whether, at some point the rights are so “cut up” that they cease to add up to more than the whole. It is interesting to note that Star India paid a premium in order to hold both the streaming and broadcast rights to the IPL.
Thanks to the Board of Control for Cricket in India’s openness with regards to their bidding results, we can see that the sum of the highest bids for each of the individual elements of the tender amounted to $2.4 billion (https://twitter.com/ipl?lang=en). Star India therefore paid $100 million premium to ensure that it had both the broadcast and streaming rights.
Given this uncertainty it is likely that rights holders will look at creating new rights models for future bidding processes.
Having dipped their toes into the market it will be interesting to see whether the tech companies make plays for the premium sporting content that is coming up for auction in the next year (for example the English Premier League and the NFL streaming rights). With the emergence of new technology and changing viewing patterns this is a fascinating time for those involved with broadcasting live sports.
This article was written by Alex Griffiths, Trainee. For more information please contact Alex on +44 (0)20 7438 2108 or email@example.com
News & Insights
The Medical Costs Act — what it means for pharma and pharmacy
David Reisser explains the new Health Service Medical Supplies (Costs) Act and its implications for pharmacy.
Toast of Surrey Business Awards: proud sponsor of Company of the Year
Proud sponsor of the Company of the Year Award at the Toast of Surrey Awards 2017
Standards and contracts collide – lessons for IT services to learn from wind farm design defects
A recent case on the defective design and build of wind farm machinery bases is of relevance in contracts for other sectors