The big bucks around football

  • Business
  • Saturday, 03 Oct 2009

A VERY expensive bidding war for rights to broadcast the Barclays Premier League (BPL) in Malaysia is poised to have a big impact on the local pay-TV market. The fight, very likely involving Astro, Telekom Malaysia Bhd (TM) and ESPN STAR Sports, also highlights how UK-based Football Association Premier League (FAPL) is seeking to milk the most out of the situation.

“There are regional and country specific bids taking place simultaneously. Only the FAPL is privy to the bids. They may choose to sell country specific rights if the bids are high enough and still sell a regional package minus that particular country, thereby getting the most out of it,” explains an industry source.

FAPL just recently netted a tidy sum from SingTel, believed to be in the region of S$400mil, for the Singapore rights of the next three BPL seasons. Now it is believed that the bidding for the Malaysian rights could top RM500mil.

Another industry player describes the situation like a bad virus emanating from Hong Kong first, Singapore second and now hitting Malaysian shores.

A few years ago, Hong Kong cable TV provider iCable lost out in a bid for BPL rights to PCCW, who bid a hefty price for it, the first time BPL prices rose significantly in Asia. iCable did lose a large chunk of its customer base as a result.

The “virus” seems to be spreading elsewhere too. Prior to the Singapore bid, Abu Dhabi TV paid an estimated US$325mil for the next three seasons of BPL rights for Middle East and Africa. The hefty price represents a 250% hike from what was paid previously by pay TV operator Showtime Arabia.

BPL ranks very high among TV viewers in Malaysia too and hence the situation highlights the risks to Astro if it loses the BPL rights. “The EPL is often the swing vote when customers decide which pay TV to subscribe to. While in Malaysia the landscape has been dominated by Astro, things could change if another provider gets exclusivity to EPL,” says an analyst.

Singapore’s cable TV operator StarHub has already seen some selling pressure on its shares after losing the BPL rights to SingTel a few days ago.

Notes an analyst, “Given that an estimated 70% of Astro’s subscribers are on the sports package, losing the rights could potentially have a negative impact on its earnings.”

In any case, Malaysian viewers are likely to have to pay more for watching BPL games next season. Even though Astro’s sport package ranks as one of the cheapest in the region, viewers have often grumbled about its high prices. Indeed, it is understood that the BPL is not profit generating in itself for Astro. Now that Astro is in a bidding war, there are a few possibilities: if Astro wins, it is likely to pass on its higher cost to subscribers. Or Astro may have to licence it from the winner and very likely have to pay more than what it is paying EPSN at the moment.

A third likelihood is that Astro has no access to broadcast BPL – in other words, losing the BPL rights to TM, who are more likely to keep the rights exclusively for their own broadband TV service or share it with fellow government-linked company, Media Prima.

If the latter happens, Astro would be in the same sticky spot that StarHub is in now. Goldman Sachs had this to say about StarHub after it lost the bid: “We think the stock will struggle to perform over the coming quarters given the high level of uncertainty over subscriber stability in the coming one to two years from the BPL loss.” While detractors say that TM does not have the infrastructure yet to roll out its planned broadband TV and is therefore not wise to spend lots of money in buying the BPL rights, the fact remains that it has the cash to do so and buying the rights does fit into its longer plans of having a pay TV service.

In the end though, the question does arise as to whether Malaysian companies are having to pay too much for BPL rights. All the money spent will be an outflow of funds from the country. Research company TV Sports Markets says that Singapore is the BPL’s second-most lucrative overseas territory worldwide, after Hong Kong. Malaysia is likely to be in the same league, considering the bidding war that is ongoing.

And not to forget, that Malaysian BPL viewers are very likely going to have to dig deeper into their pockets to watch their favourite sport from the next season onward. Perhaps that’s just the price of football today.

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