Market Insight

Gazprom Media to launch free sports channel on Russian terrestrial TV

June 05, 2015  | Subscribers Only

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Gazprom Media is launching a free-to-air sports channel which will be available on terrestrial TV throughout the Russian Federation. The channel, Sport, will replace public broadcaster VGTRK’s Russia 2 channel on the analogue airways and on the first DTT multiplex in autumn 2015.

The Board Chairman of Gazprom Media and the head of Kontinental Hockey League, Dmitriy Chernishenko, said that the ‘development of the commercial potential for sport is impossible without a popular channel which is dedicated to sport’. He claimed that ‘sports federations and leagues, marketing and advertising agencies, professional clubs, sports personalities and most importantly fans, will benefit.’  The launch of the channel was supported by President Vladimir Putin at the State Committee for Sports and Physical Education meeting which was held on 2 June at the Kremlin.

Gazprom Media owns satellite TV operator NTV Plus, which offers 16 sports pay TV channels, as well as free-to-air channels 2x2 and TNT. The conglomerate was granted access to some of the 1.2 billion Russian roubles ($ 21.7 million) which were earned by the Russian government as a result of hosting the Winter Olympic Games in Sochi in 2014. Gazprom Media is going to compensate VGTRK for the loss of Russia 2 but the amount has not been revealed.

Roughly a third of Russia 2’s programming is dedicated to sport.

It is unclear at this stage how much will be spent on sports rights and what events will be shown on Sport Plus. Gazprom Media mentioned that it does not believe that the new channel will cannibalise its pay TV audience. Chernishenko gave an example of how the new arrangement might work: ‘if the semi finals and finals of a tennis grand slam are on Sport then all of the other rounds will be on the NTV Plus pay TV channels.’ He said that Sport will act as a ’showcase’ for other NTV Plus pay TV channels.

Sport will not be the first free-to-air sports channel in Russia. In January 2002 an NTV Plus sports channel replaced TV 6 after its bankruptcy to air the Olympic Games in Salt Lake City and it stayed on terrestrial airwaves until June of that year, when it was replaced by TVC. In the summer of 2003, VGTRK launched a free sports channel named Sport which remained on air until 2010, when it was replaced by Russia 2. VGTRK found it difficult to purchase TV rights for the premium events because of rising prices and the lower end competitions did not rank highly with Russian viewers.

Our analysis 

The channel launch is part of the wider campaign by the government to develop sport in Russia. Hosting the Winter Olympic Games in Sochi in which the Russian Federation team came top of the medal table boosted the government’s popularity. Giving the nation a free sports channel is may boost Putin’s approval ratings, which is especially important now as the country experiences adverse economic conditions.

Gazprom Media has been operating the DTH platform NTV Plus since 1996. It currently offers 20 sports channels in its sports package, including 16 unique standard definition channels and four in high definition channels.

So far NTV Plus has been loss-making business for Gazprom Media. ln 2014 it lost 1.8 billion roubles ($ 32.5 million) on revenues of 8.8 billion roubles ($ 159.0 million). The new channel may hurt NTV Plus further. The comment of the CEO of Gazprom Media about using Sport as a showcase for other pay TV channels suggests that it will not have a lot of different content and it is unlikely to afford more sports rights as their prices have been increasing dramatically.

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