Broadcasters could prevent Premier League disaster

Blue Sky thinking: Broadcasters could prevent Premier League disaster by asking for more games and better access instead of repayment after coronavirus crisis

  • Leading broadcasters in sport are feeling the effects of the coronavirus crisis 
  • Yet research shows live TV viewing has risen by 25 per cent during lockdown
  • Sky and BT will demand rebate of up to £414m if remaining fixtures go unfulfilled
  • They may ask for more games next year to ensure clubs remain financially stable

Sky Sports’ attempts to lay their hands on anything to show has known no bounds in the past few days, from Ole Gunnar Solskjaer on a Skype call in his kitchen to a virtual F1 race featuring Ben Stokes.

If the company wasn’t suffering enough, a report by Enders Research on Wednesday showed that live TV viewing has risen by 25 per cent during the lockdown. 

The problem is that next to none of that business is heading the way of Britain’s most innovative sports broadcaster.

Leading broadcasters in sport are feeling the financial effects of the coronavirus crisis

The company will not disclose how many people have paused subscriptions since they — unlike BT Sport — provided that option to prevent a haemorrhaging of customers.

This kind of punishment is like nothing the business has known. The question consuming every Premier League club board is whether Sky and BT will demand a rebate for some or all of the £414million owed for the non-fulfilment of fixtures if the 2019-20 season is not completed. It is an existential question.

The reasons why broadcasters could ask for a fair chunk of that cash back relate to the companies’ own bottom line. 

That Enders Research report pointed out football is a vital driver of pay-TV at this time of year. Customers subscribe on impulse, they said, ‘as competition heats up for the top places and in the fight to avoid relegation’.

Sky Sports have taken an innovative approach during the coronavirus lockdown

Even if Sky had sport to offer, they could not acquire viewers to see it: they have abandoned all new connections until June.

Sky Sports managing director Rob Webster and his deputy Jonathan Licht are in daily contact with the Premier League but there is no indication of the broadcaster’s intentions — because no one knows how this crisis will evolve.

‘It’s like the political question about what the endgame is to the lockdown,’ said one executive. ‘At the moment, no one can say.’

The consensus in the football and TV industries, though, is that Sky and BT are going to have to bear some of the brunt. 

The ‘zero option’ of turning off the tap would cause particular devastation to clubs such as Bournemouth and Watford, for whom TV revenues are respectively 88 per cent and 83 per cent of their earnings.

Sky’s status as one of the foundation stones of the Premier League — effectively a co-creator — makes the idea of them bailing out uniquely difficult.

Bournemouth are one of the clubs who could be left devastated if broadcasters ask for rebate

‘Sky and the Premier League have grown up together,’ said sports business analyst Richard Gillis, creator of the influential Unofficial Partner podcast.

‘They’ve been entwined commercially since the early 1990s. We’re into the realm of the unknown, but it’s hard to see a scenario in which Sky bring the Premier League down. The length and strength of the relationship with the Premier League is so important to them.’

In France’s Ligue 1, there is a real threat of TV rights cash vanishing. Canal+ and beIN Sports will not be paying their April instalment and streaming service DAZN have suspended payments.

The two British broadcasters are in a more delicate position. The pressure on them is multiplied by the emergence of competitors looking to grab Premier League content. 

Amazon attracted a record number of sign-ups to their Prime service by live-streaming 10 games before Christmas and were already preparing to mount a major challenge to Sky and BT before the crisis hit.  

Netflix will also be circling when the rights are up for tender in 18 months.

‘If Sky and BT try to squeeze us now, we’ll remember who our friends were in the crisis,’ said one Premier League executive. ‘Now is the time we need support.’ 

Amazon attracted a record number of sign-ups to their Prime service by live-streaming 10 games before Christmas, and they could compete with Sky and BT next season

The broadcasters are thought to be acutely aware of this sentiment. Analysts expect Sky to ask for extra ‘inventory’ — in industry parlance — to justify taking a big financial hit now.

‘There are things the Premier League could give up, like more games next season,’ said James Barford of Enders. 

Gillis said that ways of making up for the loss of games this season could include extending the TV rights contract or adding content. Though the prospect will not delight managers or club media departments, greater access — perhaps to dressing rooms — could form part of the negotiation. 

Lower league clubs have already accepted that and the events of recent weeks have been a leveller. Such trade-offs will be less appealing to international rights holders, whose money makes up a mighty 46 cent of the Premier League cash pot. 

‘They get far more games anyway,’ said Barford. ‘Extra content is less appealing because the Premier League is only one part of their portfolio.’

It will be harder to strike a deal over the £348m which these rights holders will be owed. There is a sense that clubs and players must do their bit if they want the broadcasters to play ball.

Sky chief executive Jeremy Darroch is donating at least six months of his £1m annual salary to charity — as is his BT opposite number Philip Jansen, who earns £1.1m. 

Sky CEO Jeremy Darroch is donating at least six months of his £1m annual salary to charity

‘If broadcasters see other people taking a hit and compromising, it will incentivise them to be more reasonable,’ said Barford. ‘If clubs have received no reduction in salaries at all, it is harder to feel sympathetic.’

The problem is no one knows when this will end.

‘It could go on for three months, even a year. At that point, all bets would be off,’ said Gillis.

For Sky and BT, whose most recent annual profits were £1.17bn and £2.7bn respectively, the commercial benefits of soaking up most of these losses could be monumental.

Should the Premier League restart in early autumn amid a mood of national celebration and vast viewing figures, Sky and BT would be able to say they stepped in to save football in its hour of greatest need. 

Additional reporting by Sami Mokbel.

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