Market Insight

Sky and Mediaset will continue to share Italian Serie A rights

June 27, 2014

Tim Westcott Tim Westcott Director, Research and Analysis, Programming
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Italy's Serie A football clubs have agreed the allocation of TV rights to Italian league football for the three seasons starting in 2015/2016. Under the new deal, Sky Italia and Mediaset will air all matches live simultaneously on satellite and digital terrestrial respectively. This effectively preserves the status quo - although Mediaset will transmit more matches than it does under the current deal. 

The allocation of rights was finally announced last night after lengthy negotiations between the clubs, apparently stemming from an unintended outcome in the bidding process by which Sky lodged the biggest bid for digital terrestrial rights while Mediaset's bid for the satellite package was the highest. Mediaset has been awarded rights to matches of all 20 Serie A clubs but has agreed to sublicense satellite rights to Sky Italia.

The Lega advertised five packages of rights: Package A, consisting of satellite rights to home matches of the eight leading Serie A teams. Package B was for digital terrestrial rights to the same clubs - with both internet, DVB-H, mobile and online rights thrown in to both packages. Sky Italia secured Package A with a bid of €357 million a season, well above the reserve price of €274 million. Mediaset won Package B with a bid of €280 million (reserve price, €274 million) as well as Package D - consisting of live rights to the other 12 clubs on all platforms with an offer of €306 million (reserve prince €235 million).

Two other packages offering additional footage from matches of three top 12 clubs, and a package of over-the-top rights, were not awarded, having failed to attract bids of more than the reserve prices.

Our take

While a complete picture has yet to emerge, it appears that the Lega Serie A, which was advised by Swiss rights agent Infront Media in the tender process, has achieved an increase in the value of domestic rights to Serie A. Under the current contract, Italian media rights are generating €2.487 billion, and under the new agreement the clubs will receive €2.829 billion - an increase of 14%. This is a respectable return, though less than the 23% France's LFP achieved earlier this year and much less than the last auctions for the Premier League in the UK and Ireland and the Bundesliga in Germany. The amount is also lower than the reserve price set for the five packages.

The lack of interest in the over-the-top rights package is also significant - indicating that for live sport, TV is still the preferred medium for mass audience live events, especially in a market where two pay TV platforms are competing head on for subscribers.

Mediaset appears to have got slightly the better of the new rights agreement, as it will have coverage of all 20 Serie A clubs from the start of the 2015/16 season (it currently has rights to the top 12 teams), and will have exclusive rights to the UEFA Champions League in Italy for three years starting in the same season. The much stronger offering of content for Mediaset could improve ARPU for a service which has originally planned to break even in 2010 (the company no longer reports EBITDA for Mediaset Premium) but which has struggled to build on a rapid start which was fuelled by Italy's rapid progress of analogue switch-off.

Programming costs for Mediaset will, however, increase significantly from the start of the new football contracts. The company is reported to be in talks to sell a stake in Mediaset Premium to Qatar's Al Jazeera group. It is also believed to be close to selling its stake in Spain's DTS to Telefonica.If a cash injection from a new partner fails to materialise, Mediaset could also reduce the cost burden of the Champions League by sub-licensing rights to Sky Italia.

Sky Italia, meanwhile, will maintain its coverage of Serie A for three more seasons. While a knockout bid for exclusive rights would have been an option - and also an approach more in line with the aggressive habits of its owner 21st Century Fox -  it seems that the clubs are happy to preserve the current state of affairs where consumers can choose between a more comprehensive but pricier offering on satellite and the lower cost Mediaset DTT option.



Mediaset Sky Italia
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