Peanuts For Traditional TV, Salad Days For Pay-TV

Michael Hedges July 27, 2015 Follow on Twitter

Traditional television broadcasters have been backed into a painful corner. Video on demand services of the subscription kind are steadily raiding viewers who will pay for top flight drama and comedy series. Big name live sports is increasingly the domaine of pay-TV operators. Free-to-air broadcasters find the left-overs less than tasty.

Public broadcaster France Télévisions owns, at least figuratively, the Tour de France. It has been broadcasting the world’s most famous cycling event since 1948. This year’s audience estimates have been - heatwave considered - roughly the same as last year, and the year before that, and the year before that - averaging three and a half million viewers for each stage. Audience measurement service Médiamétrie’s Twitter TV ratings, however, show the Tour de France most watched on the social network, ahead of Harry Potter and the Bastille Day celebrations, reported Les Echos (July 26).

ITV in the UK pulled between 2.5 and 4 million viewers during the early stages of the Tour de France, according to BARB figures, as British cyclist Chris Froome took the lead. German viewers were once again able to watch on public TV channel ZDF after a three-year hiatus stemming from cycling’s doping scandal. But the audience figures showed a slow start. Dutch viewers tuned in early and often to public network NOS, local interest being the second stage raced in the Netherlands. "Never before this century, and probably for the first time in the history of Dutch television, have so many people in our country watched a live broadcast of the Tour de France,” said a NOS spokesperson, quoted by telegraaf.no (July 14).

Eurosport also carried the Tour de France on its free-to-air channels across Europe. The Eurosport group of television sports channels will become, as expected, wholly owned by Discovery Communications after an transaction announced last week. French broadcaster TF1 will exit its remaining 49% stake in exchange for €491 million when the deal passes all the required tests sometime in the fourth quarter. TF1 will in turn buy Discovery’s 20% stake in French thematic channels TV Breizh, Histoire, and Ushuaïa TV for €14.6 million.

“Discovery Communications is excited to expand and deepen our investment in Eurosport as we continue to strengthen our newest global brand with locally relevant sports rights that create value for fans, advertisers and distributors,” said Discovery Communications CEO David Zaslav in the requisite statement. The company took its initial 20% Eurosport stake in 2012, increasing that to 51% this past January when it acquired the French Eurosport channel. Discovery Communications and TF1 “intend to extend cooperation in the years to come,” said the statement before the money changes hands.

Stunning more than a few broadcasters, Discovery Communications made a bit of news at the end of June by acquiring all European rights “across all platforms, including free-to-air television, subscription/pay-TV television, internet and mobile phone” to the Winter and Summer Olympic Games from 2018 through 2024 for €1.3 billion. UK and French rights to the 2018 summer and 2020 winter games held by the BBC and France Télévisions, respectively, are not part of the deal. Russian Federation rights were also not included. The International Olympic Committee (IOC) made clear that 200 hours of the summer and 100 of the winter games will be offered free-to-air, national broadcasters bidding for sub-licensing.

“We are indeed concerned for audiences in our Members' countries not getting full access to all the Olympic sports at the Games,” said a statement from the European Broadcasting Union (EBU), which represents national public broadcasters and had made an unsuccessful bid for the aforementioned Olympic Games rights. “This development illustrates the shift in the IOC’s previous positioning of the Olympic Games as a free-to-air event that reached all of the European television audience to a pay and other platforms event with minimum free-to-air obligations. Nevertheless, we congratulate Discovery/Eurosport on its successful bid, particularly as Eurosport was initially established within the membership of the EBU.”

German public broadcasters are furious. “We need to think about the scope and extent of coverage,” said ZDF sports director Dieter Gruschwitz to news agency dpa (July 25). ZDF could “scale back” Paralympics coverage in response. Public broadcasters “won’t settle for crumbs,” said an unnamed official to faz.net (July 1).

"Discovery is now the gatekeeper of European rights,” said Pinsent Masons lawyers sports rights expert Julian Moore in the firms online newsletter out-law.com (July 6). “What they do with those rights will be determined primarily by two factors: firstly, their commercial model and what will maximise returns on their significant financial outlay on the rights, and secondly, listed events legislation. They will not want the commercial model to be dictated to by legislation.”

Not content with simply buying broadcast rights, Sky - formerly known as BSkyB and principally controlled by 21st Century Fox - and Liberty Global are bidding against a Qatari investment fund and Canadian billionaire Lawrence Stroll to acquire the 35.5% stake in Formula 1 (F1) racing held by CVC Investments and managed by Bernie Ecclestone. The CVC Investments stake includes “special” voting rights. The number tossed around is US$7 billion. Sky has UK F1 broadcast rights through the 2018 season. Liberty Global is a worldwide giant in cable TV and broadband internet. Its chairman is John Malone, a Discovery Communications board member and significant minority shareholder.

For subscription and pay-TV services the obviously expanding customer base are the deeply committed, whether fans of a drama series not otherwise available or live sports featuring home-country stars. The rest of television broadcasting either competes for expensive rights and productions or settles for viewers who just have the TV on. There’s a commercial market for that. It’s called peanuts.

See also in ftm Knowledge

The Games People Watch

Media and sports are a powerful combination. Together they capture huge audiences and considerable money. This ftm Knowledge file looks at the competition from football rights battles and cycling coverage with new media to the Olympic Games. 82 pages PDF (October 2012)

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