Will Malaysians have to pay more for their football fix, especially with Barclays Premier League TV rights on the increase?
AS THE curtain comes down on Euro 2012 and Spanish fans continue to celebrate their triumph over Italy, football fan across the globe will be eagerly anticipating the 2012/13 football season kick-off.
Arguably, the most anticipated league would be the Barclays Premier League (BPL) that showcases the top 20 teams in England competing for a top place finish after 38 games each but at what cost?
The bottom line: Can Malaysian football fans handle an increase in their satellite TV subscription fees or can advertisers bear the cost of any potential increase to rate cards?
Just before we get further, let’s look at BPL’s astounding figures worldwide. Accountancy firm Deloitte in a report said the BPL retained its place as European football’s most lucrative competition after revenues for the 2010/11 season increased by 12% to top £2.3bil (RM11.4 bil).
Deloitte Sports Business Group representative Dan Jones said top clubs in English football have continued to show impressive revenue growth despite a difficult economic climate.
“Revenues for clubs in the Premier League increased by 12% in 2010/11, driven by broadcast revenue increasing by 13% to £1.2bil (RM5.9bil) in the first year of a new three year broadcast cycle,” said Jones, in an interview with CNN.
Recently, BPL secured an unprecedented £3bil (RM14.8bil) deal for domestic TV rights in Britain for three years, firmly cementing its status as world football’s richest competition.
The agreements, which start from the 2013/14 campaign, are a remarkable 70% increase on the current contract. Britain’s BSkyB will show 116 games a season – the maximum allowed for one station – and newcomers BT formerly known as British Telecom has gained a 38-game foothold.
Premier League chief executive officer Richard Scudamore said via a statement published in the league’s official website: “The Barclays Premier League continues to provide excellent football and enthralling drama as we saw last season. The value this drives for our rightsholders is evident and we are extremely pleased that this has been realised for our UK live rights.
“As ever, the security provided by broadcast revenues will enable our clubs to continue to invest in all aspects of their football activities and plan sustainably for the foreseeable future.
“This deal allows them to keep delivering what fans want top quality football in some of world’s best club stadia and an increasing focus on and commitment to areas such as youth development.”
However, the mind-boggling figures sent shivers down the spine of most football fans in Asia, especially in Malaysia as many predict that this may cost overseas TV rights to rise.
In Malaysia, Astro is the sole provider of BPL matches with its sports package (Astro SuperSports channels, ESPN and StarSports). It is widely speculated if there is an increase in overseas TV rights, Astro will find it hard recuperate its investment unless drastic measures are taken financially.
Astro, when contacted, declined to comment on the subject matter but a financial analyst based in Kuala Lumpur speaking anonymously informed MetroBiz that overseas TV rights for BPL could see a rise between 25% and 30%.
“BPL has one of the biggest followings in the world. The brand has marketed itself as such and individually the teams have a strong global presence,” said the analyst.
“BPL teams constantly visit Asia to build brand awareness and to establish a strong rapport among fans. The teams recuperate their investment through TV rights, endorsement deals and merchandising.
“However, Astro is the sole provider of BPL here and if overseas TV rights increase, it may strain the satellite TV provider’s finances as advertisers may not be able to afford the increase in ad rates,” he added.
The cash cow
According to Girish Menon, the managing director of Mindshare Malaysia and chief executive officer of GroupM Malaysia, sports advertising only contributes 5% of total television advertising in Malaysia.
“Sports advertising in Malaysia is under-performing. In general, advertisers want prime time general entertainment slots and not targeted content as advertisers are focused on minimising their cost per reach,” he said.
GroupM is WPP’s consolidated media investment management operation, serving as the parent company to agencies including Maxus, MEC, MediaCom, Mindshare, Catalyst and Xaxis with worldwide billings approximately US$73bil (RM231bil) in 2010 making it the global number one media investment management group.
Menon explained that the industry calculates advertising dollars via cost per reach; how many eyeballs for a particular advertisement.
“Basically, if a channel increases its rates disproportionately and we do not see a corresponding increase in reach, we will advise clients to move their budget around unless the brand has a strong connection with football such as Maxis or Castrol, or if the product targets the male market segment,” he emphasised.
Advertisers may opt for change to the traditional media mix if Astro decides to increase its rate cards for the BPL.
“If an advertiser finds it hard to sustain television advertising for BPL with the rising cost, then print and online media will be considered,” said Menon.
For the first two months of this year, the top five advertisers were Unilever, Procter & Gamble, Canon Marketing, Glaxo SmithKline and L’Oreal. The product/service categories with the highest ad spending were local government institutions, women’s facial care, photography, mobile line services, and fast-food outlets none of which targets the male market segment predominantly.
Menon also did not rule out the fact that Astro could drop BPL all together as it will not impact the company’s ad revenue on a big scale.
“They will not worry too much about losing ad revenues by not broadcasting BPL,” said Menon, adding that Astro’s viewership for the past three seasons of BPL has not increased from an average of 0.2% of total TV viewing.
“Only some games involving the teams from Manchester (Man United and Man City) command between 3% and 5% viewership although this does not account for public viewing,” he said, quoting information from analytics provider Nielsen Malaysia.
He insisted that the sports package is a high demand in any market.
Keeping the masses happy
Malaysian Red Devils is a group of Manchester United supporters and never misses any Manchester United games throughout the season said it would be unfair to the fans if there was an increase in overseas TV rights.
Its president Hairul Nazmeiy Salleh said that 40% of club members are students or young executives who may not be able to afford the price increase.
“Any increase will definitely draw negative remarks and that’s just the way it is. However, by introducing the pay-per-view concept, it could work to Astro’s benefit,” he added.
However, the Malaysian Toon Army, a group of Newcastle United supporters feel that true fans would still pay an additional 30% of their current sports package offered by Astro to watch their favourite teams play.
“In Malaysia, we need to have our BPL during the weekends or else we would be bored but it will be Astro’s loss if they introduce pay-per-view for BPL. It may turn away some supporters,” said Malaysian Toon Army’s president Mohd Nidzam Kamaruddin.
Nidzam also did not rule out a possible switch to Asian Broadcasting Network Sdn Bhd if Astro decides to drop BPL and the former invests in the securing the BPL rights.
Restaurant operators are dissatisfied with the idea of an increase in BPL TV rights which may result in a price hike locally.
When contacted, a restaurant operator in Petaling Jaya, who declined to be identified, said the BPL contributes approximately 30% to their revenue monthly.
“Business is definitely good when we are showing BPL games. The restaurant will be full and each table will have at least four to five people. We invested in projectors and Astro to draw this crowd but any increase to the package fee will result in losses for us,” said a restaurant operator.
The new player?
It was reported that ABN, a new player in cable television here, has promised to offer 25% to 35% cheaper start-up packages than others when it starts transmitting and also providing a basic package of between 40 and 50 channels upon launching soon.
In Britain, long-time BPL rights holder BSkyB won five of seven TV rights packages for football games in the BPL, with smaller holder Walt Disney’s ESPN losing out to newcomer BT for the rest. Could something similar happen here?
By securing the rights to BPL, ABN would definitely find themselves in the driving seat in achieving their target of 500,000 subscribers by year-end.
According to published reports the group is aiming for 40% market penetration within the next five years.
As of now, the upcoming BPL season is still very much in Astro’s park – football fans can rest easy this season.
But with the shift in major BPL TV rights holders in Britain and rising BPL TV subscription costs, it is anybody’s guess if exclusive TV rights for BPL in Malaysia can be held by just one broadcaster.