Member Insights: The End Of Premier League Broadcasting As We Know It?

Following the news that Chinese broadcaster PPTV had seen their contract with the Premier League terminated due to a failure to pay their latest £160million instalment to the league, Nick Lewis looks at how broadcasting will adapt to the new political and financial landscape. 

It is highly likely that the recent collapse of the broadcasting rights for the Premier League (PL) in China will not be part of a renegotiated deal with PPTV, and it is also unlikely that the rights will distributed to another Chinese TV Broadcaster, as the PL have previously been let down by LeSports (formerly LeTV owned by LeEco); the old saying springs to mind: once bitten, twice shy, three times a fool!

A few years back the PL and AELTC (Wimbledon) were let down after signing extensive TV rights distribution deals in China, only the PL did not recover their losses unlike Wimbledon.

Once again we find ourselves in a position where the PL has not been paid £160m as the first instalment of a £564m TV deal, which has led to the immediate cancellation of the contract by the PL. Will the PL be more fortunate this time around in obtaining compensation and can the PL Clubs afford to wait?

“For the current 2019 to 2022 cycle, the sales process culminated in a fall in domestic income, which was offset by a 30 per cent rise in the value of overseas contracts”

Although the PL saw the overall value of its broadcast rights climb eight per cent to £9.2 billion for the current 2019 to 2022 cycle, the sales process culminated in a fall in domestic income, which was offset by a 30 per cent rise in the value of overseas contracts. With the pressure of Covid-19 starting to take its toll with huge losses of revenues due to an absence of fans and corporate hospitality from match-days, the PL clubs have had their transfer strategies and club economics thrown into disarray. One can only assume that the longer that revenue is not being amassed through the lucrative Chinese TV market (or other overseas markets), this is only going to extend the dark days for all the PL clubs. With Financial Fair Play (and the rearranged form it may reappear in), and generally for good governance, each PL club needs to know its revenue for the year ahead, and that is far from the case at the moment.

Over The Top (OTT) and Online Streaming Direct To Consumer (DTC) has not come in or been wheeled out as quickly as expected. Richard Masters, the PL’s CEO, said they “were ready last time and we will be ready next time”. However, it is widely accepted that these platforms are leading to the Broadcasting Rights being diluted and their value coming down (quickly), hence the PL’s cautious approach to date. Most worryingly though, viewing numbers are dropping too, rights acquirers are not investing in the sport itself, the primary product.

Traditional TV broadcasters, such as BBC, ITV and Sky Sports were very good at investing in the product, as they would invest below the line, through the promotion of their association with the rights they had acquired in either the PL or other individual sports events. Amazon has this past week taken up a one-off, reportedly multi-million-pound deal for the rights to show Rugby Union’s new International August Nations Cup in November, which coincides with its strategic push to attract new customers before Black Friday and Christmas.

Amazon last week agreed a deal to broadcast the upcoming Autumn Nations Cup in 2020.

In essence, Amazon is only interested in building an e-commerce database around sports fans, and in this case, high net worth families who are considered rugby fans. This hidden motivation and continuation of investing in their own interests will damage the ability of rights holders to reach their consumers.

The rights holders need to ask the OTT and DTC companies what they are going to do for them? The downward spiral needs to be stopped. With dropping participation and viewing figures, this does not provide for a healthy sports eco-system. Amateur participants – professional competition – broadcasting rights – spectators (consumers) generating funds to be re-invested into the grass roots.

The downward spiral needs to be stopped. With dropping participation and viewing figures, this does not provide for a healthy sports eco-system.

OTT and DTC or even subscription video on demand (SVOD, such Netflix or Disney TV) provide huge potential to access large numbers of consumers but these platforms do take away the ability of the Rights Holders to engage with their own consumers. By going direct to the consumer, the rights holders can keep the user’s data, learn more about their customers and ultimately by not having this access it is stopping them from being commercially competitive.  In a similar fashion, losing potential consumers to e-gaming has to be a concern for those sports wanting to establish an e-sport version of their own product.

It fair to say that Amazon’s production output has significantly improved in quality since they were effectively forced into obtaining one of the PL’s domestic packages early. Accordingly, it could be argued that they should be afforded the opportunity to demonstrate to the PL and various other sports that they have wide reach and that they can have an overall positive impact on sport.

Previously it has been thought that guaranteed revenue from broadcast rights, even in smaller markets, was more important for the PL and its 20 stakeholder clubs than risking an untried and untested OTT or DTC approach. It is no secret that the PL have been considering when it is best to develop and launch its own OTT or DTC strategy but is being forced to do it now in China.

If the PL still does not consider it a viable option now, then the question is when, and surely the bigger clubs will want to force the issue and utilise/ maximise their reach by developing their own OTT and DTC approach?  Could this lead to the end of collective bargaining of PL Rights? Never has the robust negotiations on the small print been so important in the legalities of the broadcasting contracts, particularly with rising geo-political tensions.

Nick Lewis, Sports Partner at JMW Solicitors, has acted as legal counsel to a number of Premier League clubs and players, also including work for British Swimming, British Athletics and the US Anti-Doping Agency among others.