A festive forecast: unwrapping the future of EPL media rights

This month sees initial bids for the Premier League’s UK broadcast rights.  For once, this is a sports rights process where we don’t have skin in the game – so, at the risk of looking foolish come December, what do we think might happen?

Some background

• The current deal is a three-year rollover of the previous agreements, with Sky, BT (now TNT) Sports and Amazon sharing the rights

• The 2019-22 deal was down 10% on the preceding one, meaning that almost three cycles have now elapsed since the last increase (there has of course been strong growth in international rights income)

• Italy’s Serie A and France’s Ligue 1 have gone to market this year; Serie A has agreed a five-year deal at a lower level; while Ligue 1 received no bids that met the (somewhat aggressive) reserve price, and is now engaged in individual negotiations

Faced with challenging market conditions, the Premier League has made two significant changes designed to increase value:

• More matches are included – an increase of 70 matches a year from the current 200 (while retaining the Saturday 3pm blackout window)

• Rights are being sold for a four-year period rather than the traditional three – longer cycles are typically worth more as they give broadcasters more certainty, and new entrants get more time to make the business work

What do we think will happen?

Firstly, it’s important to note that in any sports rights process, competition between bidders drives the price obtained rather than the underlying “true” economic value of the rights.  The implosion of Viaplay earlier this year has taken one potential player off the board.  Another, Amazon, currently has two “matchday” packs (all ten fixtures on Boxing Day, for example), secured and then renewed at low cost but which do not feature in this auction. But having recently invested in one Champions League fixture per week from next year, it’s difficult to see Amazon needing (or being able to monetise) 50 Premier League matches without a significant change in its business model to a more comprehensive subscription service – which is unlikely.

Which leaves us with three

Sky, of course, is likely to retain the sports property on which much of its business was founded.  The flagship 4pm Sunday and 8pm Monday slots are key; beyond this, the 2pm Sunday slots are likely to see “bigger” teams playing, with those fixtures often featuring clubs playing in Europe, so Sky will likely look to retain those too.  But the deal done earlier this year with the EFL gives Sky more fixtures on Saturdays and Friday evenings, which may give scope to reduce the number of packages it takes.

TNT have secured the next cycle of Champions League and Europa League, but the Premier League is an important part of their weekend schedule and is likely to remain so.  Given their portfolio, and the overall focus of parent group Warner Bros. Discovery on cost control, a renewal rather than an increase is likely to be their strategy.

Which leaves DAZN.  If Sky and TNT place low bids, there may be an opportunity here.  But securing one package of (not first pick) rights is unlikely to be a successful strategy – Setanta and ESPN tried this, and the results, well, weren’t great.  BT’s entry was different in that they focused on “top picks” each week, securing coverage of big clubs and must-see matches.

That means that DAZN will have to secure either two packages, or one package with top-tier fixtures.  This won’t be cheap – even at today’s values, that’s likely to be close to a billion pounds a year.  For a company that has fought so hard to achieve financial sustainability, has just secured Serie A rights for the next five years, and is involved in the French auction, that would be quite a commitment.

Splitting the rights between three buyers will also raise questions for the Premier League.  As piracy becomes more of an issue, fragmenting the rights makes piracy both more likely and harder to combat.

Could there be a wild card?  Expect some noise around Apple making a bid, but even Ted Lasso won’t be able to help given the scale of bid that would be needed to succeed.  So probably not.

Where does this leave us?  Flat or a decrease would be a very hard message for the EPL to sell to its clubs.  We expect a small increase on current values, and the mix pretty much as it is now. See you in December.