Friday, November 24, 2006

Viewers not the only potential losers

StarHub’s win of the August 2007 to May 2010 EPL rights opens up a can of worms for all stakeholders involved, from advertisers to consumers, and even StarHub itself.

For one, ESPN STAR Sports’ loss of the rights places the sports broadcaster in a very vulnerable position at the moment. With the original and self-generated content surrounding the event they’ve churned out over the last six years that they’ve held the rights, a lot of credit goes to them for popularising, building up and redefining the culture of football and the way its consumed and enjoyed. But in an ironic way, ESS became a victim of its own success, as the popularity of the EPL and the success they were having with it, in terms of sponsorships and ad sales etc. would have doubtless attracted the attention of other players keen to obtain rights to replicate the network’s achievements, thereby pushing up the rights fees to levels ESS couldn’t afford.

While it is still too early to call, it’ll be interesting to see how ESS works through without having the rights to its key product, content-wise and ad sales-wise. It must be pointed out too that during the years when the network didn’t have rights to ESS, they were pretty all right, so while the next few months might be rough, the network can look to staffing up with other content programming to ease reliance on the EPL.

The aggressive bidding exercise for EPL rights also have repercussions on everyone involved. In a trickle down effect, StarHub would have to transfer costs to their advertisers and subscribers in order to not only recoup their payout for the EPL rights, but also make sure they profit from the deal for their shareholders. The question is, are advertisers and subscribers, the revenue streams for StarHub, prepared to pay the money? If there’s a significant drop-off in subscribers due to the increase in cost and StarHub can’t get the critical mass and eyeballs they need, it might be difficult to get advertisers on board, or even command premium ad rates. StarHub might be able though, to leverage on its other platforms of broadband and mobile to balance any fallout from TV.

The only winner in all of this looks to be the Premier League, who basically sits back to watch all the bidders fighting against themselves to score the highest bid, which the Premier League then pockets to distribute among the clubs. And it looks like rights fees are only going to get higher and higher, with sports rights and athlete fees increasing – I can’t imagine what the 2010 to 2013 bid fees would be like. There might be another way though. I read a few weeks ago an analysis article in The Straits Times about a different bid method, where players can band together to bid and share the rights. It’s already being done in Australia, where I think two cable operators share rights, and compete based on tier offerings. Bearing in mind Singapore’s population is so small, it doesn’t make sense to bid staggering prices only to have to spread it so thickly across… two million people? If it’s beneficial to everyone, banding together might be a method to think about the next time the EPL lease rolls round for renewal again.

1 comment:

BjornLee said...

the australian shared-bidding model sounds like a plausible alternative. just wondering aloud, how can our anatagonistic national carriers like singtel and starhub stomach working together? lets hope they find a solution to suffering customers and advertisers by 2010.