NewsLine Column: TV’s Own Goal
There’s no getting away from it: Sport and TV need each other. But how have a load of men in silky shorts chasing a ball managed to bring a whole digital TV platform to its knees? Or should that be, how has the success or lack thereof of a marketing campaign based around a knitted monkey threatened the existence of dozens of football clubs? We’ll still pay to watch it, they still want to show it, so why isn’t the beautiful relationship working? asks MediaTel Insight’s Lucy Condon.
Last year, the Nationwide League was worth £315 million over 3 years to ITV Digital. Now ITV Digital says it is prepared to pay £185 million. In the same year, Bernie Eccleston sold the rights to Formula One to Kirch for £1 billion; they are now thought to be worth around £560 million. In 2001, Sky paid £1.1 billion for the right to show Premiership football. Earlier this month the company denied that a clause in the original contract prevented it from making a lower offer for the same rights when the contract comes up for renewal next year.
So where’s the value gone? It’s certainly true, if a little clichéd, that sport needs TV as much as TV needs sport, but maybe that fact has been taken a little too seriously over the past couple of years.
When Rupert Murdoch started his satellite broadcasting operations around the globe, sport was the hook he used to drive subscriber numbers. And it worked. This was a trick attempted by ITV Digital, not so successfully as it turns out. Hampered initially by the need to strike a carriage deal with the big boys at BSkyB, it might now be that football – the Nationwide League in particular – is the straw that breaks the camel’s (or should that be monkey’s?) back.
Kirch Gruppe, the erstwhile German media empire, apparently owned the rights to every sporting event around the globe, bar the Woodfall Infants egg and spoon race. This is a company which, to all intents and purposes, no longer exists. Leo Kirch is left as a tragic figurehead – relinquishing his command of the company he built to save what is left of it from the bailiffs, in this case Murdoch, Berlusconi and Lehman Brothers.
It’s not as if fewer people want to watch sport these days. Sport hasn’t become less interesting (well, except motor racing maybe – Irvine’s battle with MacKenzie aside). People are still shelling out their £30 a month for the Sky Sports package, paying extra for the PPV games and, lest we forget, ITV Sport, ITV Sport Select, ITV Sport Plus…. BSkyB’s average revenue per user rose by 11% to £331 in 2001.
It could be that a saturation point has been reached, that all those willing to pay to watch competitive sport already do so. It could be that the TV companies got a little greedy, which meant the leagues got a little greedy, which meant that the clubs/players got a little greedy. Most people agree that David Beckham is a good footballer, a brilliant one even, fewer would agree that he’s worth £70,000 a week in salary payments.
It could be like dotcoms or house prices, a commodity which believed its own press until the investors’ cash ran out.
Most likely, as with everything else these days, it comes down to advertising revenue. Media owners were happy to pay inflated prices for sporting events knowing that the revenues such events brought in vastly outweighed their outlay. With the amount of belt-tightening and ‘restructuring’ that’s gone on over the past year, you don’t have to be Alan Greenspan to see that spending a couple of billion on the rights to show Frank Sinclair wallop the ball into his own net might put a bit of a dent in the balance sheet.
If you would like to respond or make further comment on this or any other NewsLine article, please email [email protected]
Subscribers can access previous articles by NewsLine columnists in the Columnist Archive – click button on left.