Premier League planning TV channel to beat the recession
Exclusive: Clubs plot bold contingency plan should bids plummet in value for next TV deal
Wednesday 17 December 2008
The Premier League will "recession proof" its most important income stream – television money – by launching its own TV channel from the summer of 2010 if the value of bids for live rights plummets when the auction for 2010-13 opens in the next few weeks.
A survey of major broadcasters and industry insiders by The Independent suggests that will not be necessary. Contrary to the financial turmoil in most sectors of business, the League's overall TV income – £2.7bn over three years last time, £1.7bn of that for live United Kingdom rights alone – seems likely to remain high.
"I cannot see the rights value doing a nose dive," said a broadcasting executive whose company will be involved in the auction. "There is no evidence of a decline in interest in Premier League football. The opposite in fact."
Another insider with a different company said: "The channels with football already are not going to want to lose it. Those who don't have it want it more than ever. Football remains totally important to the business model. There is a fear factor among the broadcasters that will maintain a healthy rights income for the Premier League."
Sky and Setanta, who currently have two-thirds and a third of the live League games respectively, will certainly be in the thick of the bidding again. There is also a real possibility that the American Disney-owned giant, ESPN, will enter the fray, perhaps in tandem with Setanta as rumours persist of takeover by the bigger company.
The Premier League is also privately confident that it will register growth in overseas rights income which hit £650m last time for the years 2007-10. In the long term, it hopes that total income from foreign markets will outstrip what it earns from domestic rights.
Yet despite mounting evidence that the Premier League will buck the trend of economic doom and gloom to maintain its position as the world's richest football competition, it is sufficiently concerned about a slump that its own TV channel has become an "absolutely feasible, if not perfect" fall- back option.
The concept of Premier League TV has been mooted before. The League would sell subscriptions to live games direct to the public, on multiple platforms, as well as via established broadcasters in carriage deals.
Market evidence suggests there are now more than five million potential subscribers willing to pay upwards of £200 each per year for Premier League football. That equates to £16.50 per month, which is cheaper than most fans pay now, and might give the League a crude "baseline" income of £1bn. That compares well to the £566m earned currently each year from deals with Sky and Setanta. The major hurdle has always been that starting a channel from scratch would be costly and risky, with no sales or income absolutely guaranteed. However, the League is increasingly involved in broadcasting its international rights, producing previews, magazine shows, highlights and live feeds for foreign markets through Premier League Productions, a joint venture with TWI, a leading sports marketing firm.
If a sharp and sudden decline in bidding prices happens, threatening the financial dominance of the Premiership's 20 clubs, PLTV will only become more attractive. Even after bidding has started early in the new year, the League is under no obligation to accept any specific offer, no matter how high. If the deals on the table are not lucrative enough, the League will have more than a year to get PLTV up and running
"PLTV would be a big step and it is not the first-choice option," said one source. "But it is absolutely feasible, if not perfect. If that is the route the League and its clubs need to take to secure these important revenues going forward, it will happen. You could say it's been on the shelf for a while, and it's getting a dusting down."
On Monday the League sent out its "Invitation to Tender" documents for 2010-13 inclusive. It is expected that six packages of live domestic rights will be offered, as last time, with a pack of 23 of the best games on Sunday afternoons at 4pm the pick of the bunch. Sky won the rights to four of six packages last time, or 92 games per season for three years, paying £1.314bn. Setanta won two packages, or 46 games per season, paying £392m.
One broadcaster said: "PLTV is a possibility, but I'm sure the clubs would rather have their money guaranteed and the product in the hands of established channels as long as they're not facing a massive reduction in income."
The number of games per season Sky paid £1.314bn to broadcast between 2007-10.
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