BAD news, football fans: Expect to pay more to catch
live Premier League matches in 2010.
Industry analysts expect a bruising bidding war when the rights
to England's top division, the crown jewel of pay-TV content, come
up for auction next year. And the fallout from the battle is likely
to hit both consumers and telcos, they say.
According to a report by investment research house CIMB, the
local rights to the 2010-2012 season could cost up to
$400million.
This is a 60 per cent jump from the $250 million StarHub
reportedly paid for the current three seasons ending next year, and
a whopping six times what ESPN STAR Sports paid for the 2004-2006
seasons.
The rights are typically sold via an auction in three-year
blocks, with the winner getting exclusive rights for its market.
Globally, pay-TV rights for sports programming has been on the
increase.
When costs go up, consumers can usually expect to foot some of
the bill, even if the operator subsidises some of the costs to keep
them from defecting, said Foong King Yew, research director at
technology analyst firm Gartner.
StarHub, the current Premier League rights holder, has 511,000
pay-TV customers. An estimated two-thirds, or 340,000 households,
are subscribers of its Premier League channel at $26.75 a month
during the season, which runs from August to May.
If the tab for the Premier League rights hits $400 million,
StarHub subscribers may have to fork out up to $44 a month, based
on a back-of-envelop calculation, though the telco may subsidise
this.
It is expected to face a challenge from SingTel, which is
looking to use the games - the report calls them a 'must have' for
any serious pay-TV player - to lure visitors into its new mio TV
service, which has about 45,000 subscribers.
Pay-TV is one of StarHub's lowest-margin business segments. A
StarHub spokesman said it is losing money from its Premier League
programming while SingTel's mio TV, launched last July, continues
to bleed.
But pay-TV is a huge draw for customers, and once they are
signed up for pay-TV, the telco can hawk them more profitable
mobile and broadband services, said CIMB analyst Kelvin Goh.
Failure to secure the Premier League will affect the
attractiveness of their respective products, but getting it will
exact such a 'hefty price' that the winner's bottom line will be
affected, he said.
He added that it was almost inevitable that the price of
securing Premier League rights would make them unprofitable.
In anticipation of the impending 'lose-lose' face-off, Goh has
downgraded both SingTel and StarHub shares to 'underperform'.
He also warned of a few-fold rise in the cost of World Cup 2010
rights, which are also up for bidding next year.
Some football fans are already bristling at the prospect of
paying more to see their favourite English teams in action.
Liverpool fan Daniel Lim, for instance, said he will 'cancel
immediately if the price goes up anymore'.
SingTel and StarHub confirmed that they are interested in the
Premier League rights, although both declined to say how much they
are willing to pay.
StarHub cable TV services head Patrick Lim hoped the rights will
not cost much more since 'it is not clear why anyone would bid
substantially higher than what is being paid today'.
'Our competitor has probably learnt by now that the pay-TV
business in Singapore will never be a highly profitable business,'
he said, adding that it took StarHub's pay-TV arm a decade to show
profits.
Estimated increase
What Starhub reportedly paid for current EPL rights: $250
million
What current subscribers pay monthly: $26.75
If Starhub has to pay $400 million for the new contract,
subscribers may have to pay up to $44 monthly
Source: straitstimes.com