Tussle over BPL broadcast rights

Astro faces competition as it tries to extend the rights to broadcast English football

IT is that time again where Astro Malaysia Holdings Bhd puts in its bid for the Malaysian broadcasting rights for the highly sought-after Barclays Premier League (BPL).

BPL is one of the treasures of Astro’s programmes, with the country’s largest pay TV provider being the only broadcaster of the event for the Malaysian market since 1997.

Half of Astro’s 4.2 million subscribers sign up for its sports package.

If Astro wins the tender, it will hold the rights for the next three seasons, beginning 2016.

This time around, the bidding process is even more competitive due to the entry of a new contender - Middle Eastern-based BeIN Media. BeIN has been aggressively investing in broadcasting rights of the BPL in the Middle East, North Africa and Asia.

Backed by the Qatar government, BeIN Media is the sports television subsidiary of Al Jazeera Media Network.

In August, BeIn Media stamped its arrival in grand style when it announced that it had won exclusive rights for the upcoming three seasons of La Liga football across many major territories in Asia. These include Thailand, Malaysia, Indonesia, Singapore and the Philippines.

This is a coup from the Qatar-backed media group as it looks to scale up its Asian presence and profile.

Media rights for the Spanish football league for most of Asia-Pacific were previously held by Fox International Channels.

It is a known fact that BeIn’s next focus will be the BPL, not just in Indonesia (where it has the rights for the Champions League) and Hong Kong (where it has Euro 2016) but across Southeast Asia and Australia.

While it is not known exactly how much the broadcasting rights price are, it was reported that Astro paid close to RM1bil for its existing rights (from season 2013 to 2016).

This is said to be 25% to 30% higher than the rights of the previous three season.

Across the world, BPL’s broadcasting rights are on the rise.

Thus for the current tenders that were just put in, analysts say it is safe to assume that the bidding price is a lot higher, made worse by the weak ringgit against the US dollar.

The impact of losing the BPL

For Astro, there are two main issues it faces. If it losses the BPL rights, how will that dent its subscription revenue considering that many subscribers subscribe to Astro for the sports packages?

Secondly, is having the BPL still an attractive proposition if the price tag becomes too expensive?

On the first question, an analyst says that there are now a few possibilities that could happen should Astro lose the rights.

Firstly, BeIN could still partner Astro where it uses the Astro platform to broadcast the BPL. There is currently such an agreement between BeIN and Astro for the La Liga rights.

BeIN is working with media and telecom groups such as the MNC Group in Indonesia, StarHub and Singtel in Singapore, True Corp and CTH in Thailand, and PCCW in Hong Kong.

“Secondly, but rather unlikely, BeIN may start a second auction process where it peddles the broadcasting rights to local players such as Astro and Telekom Malaysia Bhd (TM),” says the analyst.

“TM has shown interest in the BPL rights as it wants to generate interest in its HyppTV Internet protocol television service.

Another media analyst who follows Astro feels it will be a big blow should Astro lose the BPL broadcasting rights.

“Astro has been riding on their live sports shows as a big pull for the sports package. Most of the other Pay-TV operators have not really made it because they do not have live sports show,” he said.

The other Pay TV operators in the market are Asian Broadcasting Network (Malaysia) Sdn Bhd and TM.

“The BPL is a much bigger deal as compared with the La Liga and Serie A. The BPL is the most commercialised and lucrative football league in the world. While we do not know the exact impact, I feel that the subscriber base could be affected. I would imagine that a big number of the sports channel subscribers are subscribing because of the BPL,” says the analyst.

Astro currently has a customer base of 4.6 million customers or approximately 65% penetration of Malaysian households.

An industry observer however disagrees.

While he feels that the BPL is a huge asset, it is more for branding purposes.

“It’s a valuable content property for sure.

“However, if you look at it from a P&L perspective, not having the BPL could be a good thing.

“While the BPL gives Astro premium branding, it is also a loss leader. Astro pays so much for the rights but they hardly get any sponsorships or advertisements from it,” says the observer.

He cited the viewership as an example.

Looking at the individual matches, a very popular BPL match could garner viewership of between 600,000 to 700,00 viewers.

A less popular match would garner only some 200,000 views.

However, a signature Malay programme like ‘Akademi Fantasia’ easily garners 2.6 million viewers.

“My opinion is that even if Astro loses the BPL rights, the impact is minimal.

“Afterall, the rights are only for 3 seasons, and a brand cannot be built over that short period of time. In Singapore and Hong Kong, where the BPL rights have gone from the incumbent to the start up, the incumbent still continues to do well,” says the analyst.

In Singapore, Starhub won the BPL rights from incumbent Singtel for the 2013/2016 season.

Following that, Singtel continues to record growth and is still the leader in terms of premium sports content.

He adds that averagely, content cost made up between 32% to 35% of Astro’s revenue, and he did not foresee Astro paying more than that, especially when P&L wise, there was already hardly much of a business case.

Nonetheless, the observer says that even if BeIN Media won the rights, it would still likely need Astro’s infrastructure and subscriber base to help it monetise its investment.

For the second quarter ended July 31, 2015, Astro’s net profit was almost flat at RM137.24mil from RM137.66mil previously. Revenue increased 1.47% to RM1.37bil. The company has cash of RM470.2mil as compared to RM1bil in the same period of the previous year.

Segmentally, television contributes more than 90% to its topline and some 80% to its bottomline.

For the quarter, Astro’s average revenue per user (ARPU) for its residential subscribers increased to RM99.10 from RM98. Its number of subscribers increased by 33,900 to 3.52 million from 3.49 million subscribers previously.