Astro to pay bulk of US$250mil to telecast Premier League

  • Business
  • Thursday, 08 Oct 2009

KUALA LUMPUR: Astro All Asia Networks plc will have to fork out the bulk of the costs for the rights of the Barclays Premier League (BPL) for the next three seasons – estimated at US$250mil – despite the presence of ESPN STAR Sports as a joint party in their successful bid.

It is understood that both parties will receive an agreed allocation of rights to BPL matches. The mechanics of the arrangement entail Astro paying the Britain-based Football Association Premier League (FAPL) for its portion of the football programmes and at the same time paying ESPN for the other portion in order to stream all the matches to Astro subscribers.

The total cost of the rights to the 2010-2013 BPL football matches for Malaysia is said to be in the region of US$250mil. This includes production and other costs and the payment is over the three-year period.

The only key difference now is that Astro has more clarity on the costs involved. Previously, Astro had to pay ESPN a price that the latter had asked for, not knowing how much ESPN was paying FAPL for those rights.

Astro also had to abide by ESPN’s terms, some of which were unfavourable, such as that most of the ad revenue from BPL games belonged to ESPN.

“Now Astro knows exactly how much the BPL rights cost and so will be able to know how much the ESPN mark-up is. This should put Astro in a better bargaining position,” a reliable source told StarBiz.

It is understood that there has been no need for Astro and ESPN to form a joint-venture vehicle to hold the BPL rights, as the rights will be simply divided between the two parties. Both parties had a skeletal agreement when they put in the bid and are now trashing out the finer points.

“The agreement between Astro and ESPN is a complex one and the details are being ironed out now,” the source said. The complexity lies in how costs, production of the programmes, advertisement revenue and subscriber fees are all worked out to suit the interests of both parties.

Despite being privy to the true costs involved, Astro is still facing the unsavoury task of having to hike up subscriber fees. That will always be tricky for Astro as higher fees could spell an outcry from subscribers. On the other hand, absorbing more costs could erode Astro’s margins and in turn, its profitability.

Still, winning the joint bid has its advantages. Aside from more transparency of BPL costs, Astro will also have more leeway on the look and feel in presenting the football matches that FAPL will be allocating to it directly. Astro should also enjoy all the advertising revenue on those programmes.

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