Saturday 3 December 2016

Neil Francis: Beam it down Scotty! What the future holds for sport on TV

As the cost of broadcasting rights soars higher, only the biggest global concerns will be able to compete

Published 06/12/2015 | 16:05

‘We wait for the next development in this tiny market. Apparently, it is just around the corner: Sky Sports Ireland’
‘We wait for the next development in this tiny market. Apparently, it is just around the corner: Sky Sports Ireland’

As a young boy I was always fascinated with the original series of Star Trek. Yeah, the acting was from Ikea and the script was from Bosco but as a kid your interest was focused solely on the gadgets and concepts.

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You could go to a little room, stand on a circular disc, stand still, say 'energise' to some nondescript standing behind a desk and suddenly you are transported molecularly to the planet you are orbiting. The show's creators had powerful imaginations. Okay, the blue food and dinner pills have a bit to go. The famous 'Kirk to Enterprise' on the communicator . . .

Well, here we are and people's notion of what could be in the far future has been superseded in only 40 years. Fifteen years ago I remember seeing one of those Motorola (remember them) flick-open mobile phones. I remember thinking, this is Star Trek now. It was cutting edge technology 15 years ago. Now you have the entire knowledge of the human world at your disposal on a thin 2.5 by 5.5 inch smartphone. You can ring the International Space Station from Darndale if you want to.

What about Kirk talking to the Vulcans on a big screen in the control room? My boys can Facetime their granny anywhere in the world. The point is that science fiction has become science fact and other inspirations like things that were imagined in Star Wars or Blade Runner either have become reality or in the near future most assuredly will. As a society we feed on the dreamer's dreams to put them into practised reality.

We take for granted our weather, security, communications and our television from satellites in the sky. Technology that was scarcely conceived of even 30 years ago. At the end of 2015 I shudder to think (in a positive way) how, for instance, television technology will change in say 15/20 years. How will your entertainment be conveyed to you in 2035? We might just touch on this sector on a macro and micro level and as a sports person and a rugby columnist and try and see what is coming down the road.

On a micro level, television has changed radically. Most of us in the digital age can watch what we want when we want and where we want. Most product or content falls into this dimension - film to box-sets through to documentaries. Almost all service providers can buy it and sell it to their end users.

There are only two dimensions that don't fall into this category, namely live news and live sport. Live news really depends on what is happening in the world; it is hostage to world events. It is a sad fact of life that news stations trade on tragic events like the horror killings in Paris. It might be another three months before there is another grandstand event.

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It leaves high end premium live sport out on its own as the only product that can dictate terms to the consumer. When the big sporting event is on it is the only product now in the digital age that determines where and when you sit down on the couch on a given day and watch what happens.

Service providers, consumers and advertisers have been aware of this for years. Every aspect of this dimension will escalate monetarily and will do so for the foreseeable future. Just when you think it can't go up any more, it will.

Here in Europe we were light years behind what ESPN did to shake up the established American sports market. The ABC, NBC and CBS sport content was decimated. Sure enough our little corner of the world wasn't immune to these sorts of changes.

Sky came in, slowly at first and latterly with galloping momentum, taking everything from the BBC and ITV. The white flag on live sport was unfurled long before the BBC gave up on its coverage of the British Open a year earlier than stipulated on their contract. BBC have Wimbledon, a shared roster with ITV on the Six Nations from 2016-'17, an unholy alliance to keep Sky at bay. Pretty soon they will have nothing else.

Quality sport has become the domain of the satellite subscription service provider and as Sky sat back to congratulate themselves on an almost monopoly position they received an unexpected kick in the conkers.

BT's entry into the sport television market could have been a reaction to Sky's entry into their own almost monopoly position in the telephony/broadband market or just some altruistic genius within their organisation deciding that sport couldn't be held hostage to one master and BT would come in and provide added value to their existing customer base. They realised, though, that their entertainment package would only have limited appeal and live sports rights was the only way to go.

We know that our European rugby competitions have changed radically. The English clubs were able to agitate because they had the financial backing of BT if they could deliver the Heineken Cup. We all know what happened but it seems that BT has the whip-hand when it comes to the choice fixtures. Every aspect of professional sport is driven by decisions made in the boardrooms of these companies.

The Premier League rights will rise from the ridiculous £5 billion contract when re-negotiations start. All it takes is two determined bidders with deep pockets. Sky will not take any further encroachment under any circumstances from their upstart rival.

Meanwhile, on this little patch the general consensus was that TV3 did a decent job on the recent World Cup. It is believed that they paid around €4.5m for the exclusive rights to it in 2015. It is also believed that they did not come close to recouping that figure - maybe €2-2.5m in revenues directly related to the event. For a company that has retained losses of €247m on their balance sheet and has recently posted losses of €11m for their last reporting period, it illustrates the point I am making.

TV3 have a mix of soaps, light entertainment, drama and film, but so do 300 other stations on the Sky/Virgin platforms. A premium sporting event goes a long way towards distinguishing them from the other channels. It would also have galvanised the station before its €87m buy-out by John Malone's Liberty Global. They pulled off another coup by securing the Six Nations rights in 2018, reportedly at a triple-digit increase on the previous price. This play copperfastens the notion that high end sports product is where it's at and where it will be at for years to come. Sport is the number one premium product on TV.

We wait for the next development in this tiny market. Apparently, it is just around the corner: Sky Sports Ireland. Sky has the Pro12, the GAA and now they have pinched the Saturday 3pm Premier League slot from Setanta to broadcast in Ireland. It is only a matter of time before they mop up a few more codes.

The rights for the 2019 World Cup are due to be fought over in February of next year. Japan might not have the same cachet as England 2015 but Sky and BT have rolled out the war chest for a pop at ITV. Here, with John Malone's TV3 machine driving the carriage, RTé don't seem to be in a position to compete, but Setanta/Eir or Setanta/BT might have a good stab at it. And 2023 is also up for grabs, although RWC Ltd will or should hold off until the host nation is decided.

During the summer, Discovery Communications (owner of the Discovery Channel) bought Eurosport for €491m. The IOC subsequently awarded the European rights for four Olympics to the company in a €1.3bn deal. Yet another unrelated player who thinks that premium sports events are the way forward.

The sports rights market has been compared to our recent property bubble - where the prices have reached levels where it is not economically viable - yet they keep going up and up. My guess is that in 10-15 years all the usual suspects in the European theatre will be gone and a major player will come and buy everything up. Even Sky and BT with their deep pockets will be unable to fight with somebody of the scale of, say, Apple.

Apple posted revenues of $233bn with a bottom line of $53.3bn for 2015, a truly astonishing performance. Apple next year will have total assets close to one-third of a trillion if they maintain their current performance. Ireland's GDP for 2014 was $245bn.

Apple will continue to sell their smartphones and computers but their diversification into the music download market has been very successful. They are the dominant player in that market. Television interests them too and they have started to manouevre. It is only a matter of time before they realise that to augment a ramped-up television sector that they will need quality sports content to sell.

If Sky and BT are bidding over £5bn for Premier League rights, Apple could bid any figure they want. The rights only go one way. If not Apple then maybe Google or Netflix. The TV landscape for 15 years' time is one global player who can hoover up all the current providers and sport will be the premium added value to be sold to customers.

The technology improvements, the portals, the products available, the way television product is conveyed into your home or device will change out of recognition in the next 15 years. The only certainty is that live, high end sport will be central to it, whether you want it or not.

Beam it down, Scotty!

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