For Sports Channels, The Sky’s The Limit

Michael Hedges July 24, 2009 Follow on Twitter

Big pay-TV operators are chasing the money and nothing rings the television cash machines more than sports. Exclusivity is the key. The fans will pay anything, or will they?

Modern Times Group (MTG) recently bought National Hockey League (NHL) broadcast rights (July 16) for Sweden, Norway, Finland and Denmark from rights holder ESPN. The NHL is one of the most international of the non-football leagues, lots of Swedes and Finns playing along with the Canadians, Americans, Czechs and Russians. It's fast, visual and there can be blood. The matches will be broadcast on the new Viasat Hockey channel in Sweden, Viasat Sport in Norway and other Viasat channels in Denmark and Finland. ESPN continues to hold broadcast rights for ice hockey in the rest of Europe.

The popularity of ice hockey worldwide pales in comparison with football, cricket and basketball. But in Scandinavia, Russia and much of Eastern Europe sticks and pucks are a big deal. The Viasat channels are also getting regional broadcast rights to all of the Stanley cup playoffs. Filling channels with as much ice hockey as fans desire should be easy as Viasat has rights to the Russian KHL, Sweden’s HockeyAllsvenskan league, the Norwegian Get league and the International Ice Hockey Federation (IIHF) World Championships.

The NHL’s marketing strategy after the devastating season long player lockout in 2005 includes season openers in Europe. The first matches of the 2009/2010 season will be played in Stockholm’s Globe Arena and Helsinki’s Hartwell Arena. Teams playing include many hometown favorites; local attachment is a necessity for strong support.

Ice hockey, like every other team sport, is drifting away from free-to-air TV. Pay-TV operators stump up for heavy broadcast rights fees knowing fans have little or no choice. Free-to-air broadcasters – with advertisers taking a holiday - choke on the bidding.

Is it fair? Well, all’s fair in love and war and this is war. And no broadcaster has taken the battles over sports rights more seriously than those owned by News Corporation. BSkyB and Sky Germany, which News Corp controls, and Sky Italia, owned outright by News Corp, leap at the chance to outbid all challengers, at least for the right sports products.

It’s a touchy business, broadcast rights bidding. Pockets can’t be big enough, as Setanta UK and ITV learned. Rights holders – leagues, teams and federations – see nothing but blue sky, no pun intended, as they demand bigger fees.

Competitors, usually bidding losers, can cry foul but so long as the fees are paid and viewers find all the football, cricket or ice hockey their hearts desire nobody pays much attention.

European Union Member States may grant to certain events of national interest, under a provision in the Television Without Frontiers Directive (Article 3(a)), special status requiring free-to-air television access. Finland, for example, submitted to the European Commission (EC) its national interest status list including the Winter and Summer Olympics, the FIFA World Cup, the EUFA European Football Championship, the IIHF World Ice Hockey Championship, the Nordic World Ski Championship, the IAAF Athletics World Championship and the European Athletics Championships. Italy’s list includes all matches, home or away, of the Italian national football team, Formula One and Giro d’Italia cycling championship.

Sports rights marketing agent Infront took the EC to the European Court of Justice (ECJ) in 2005 over the impact of the Directive and, eventually, won because the UK listing of national events deprived it, Infront, of customers for sports broadcast rights. The ECJ decision, finally arrived in 2008, clarified the right of sports rights brokers to sell to the highest bidder.

In the UK, a panel has been designated to revise its list of events of national interest. Public consultation closed this week (July 20) with BSkyB, other pay-TV operators and rights holders making cases for less restriction on rights holders to sell broadcasters rights to whomever they choose, obviously to the highest bidder. The panel engaged to evaluate events of national interest with respect to free-to-air TV is said to be looking at listing test cricket. Rights holders and pay-TV operators say listing sporting events harms teams and, ultimately, fans because free-to-air TV broadcasters pay less for rights.

Regulators are biting back at exclusive rights deals. The UK regulator OFCOM “recommended” requiring BSkyB to offer rights it holds to a variety of programming to others at wholesale prices. The French Competition Authority “recommended” a two year moratorium on exclusive content on pay platforms (July 7), answering a subscriber-only offer by Orange. It called the Orange triple play plan a “closed ecosystem” limiting consumers choices.

The business of sports broadcasting demands huge sums of money. Broadcasters face limits imposed by available advertising and sponsorship or, in the case of pay-TV, what customers will stump for. Saturation, in a sense, came when Setanta UK went down. As with everything, there are limits.