The Premier League has announced the award of five out of the seven packages of highly-prized UK and Ireland rights for the 2019 to 2022 contract cycle. Both Sky and BT, which currently share rights, have renewed rights, with both set to reduce their overall payments - subject to the allocation of the other two packages.
Sky has won four packages - B,C,D and E - which comprise 128 live games per season including kick-offs at 5.30pm and 7.45 pm on Saturday and 4.40pm on Sundays. Sky said it would pay £1.193 ($1.654 million) per season, a 16% cost reduction per game.
BT won Package A, with 32 games at 12.30pm on Saturdays, and will pay £295 million per season.
Under the current deal, Sky is paying £1.392 million per season for rights to 126 matches, while BT is paying £320 million a season for 42 matches.
Two 20-match packages are still unsold - probably because the clubs have not achieved the reserve price. These could be awarded to Sky or BT, another bidder, or be retained by the Premier League to be sold via its own service.
The outcome so far of the auction will be relief for the incumbents Sky and BT. The rights are the keystone of their pay TV businesses, and a loss would certainly have met with a negative reaction from the UK stock market tomorrow morning. They have also seen off the prospect of a challenge from a newcomer like Amazon or Google - even though this prospect was more a case of hype than expectation, as we said in our report earlier this month.
Despite the lower payments by both parties, the auction is not a bad outcome for the clubs.The Premier League will remain one of the sports rights holders most lavishly rewarded by TV partners despite the reduction in payments per match, despite a decline in TV audiences for live games in recent seasons and the heavy investment by Sky in original scripted programming.
Nevertheless, the League would have been delighted to have pulled a bid from one of the US techno-giants out of the hat. It may still be able to do so with the two packages still to be awarded.
Further thoughts added on Wednesday morning:
BT said last night that it is still in talks over the remaining packages. We think it makes sense for the telco to acquire further rights. BT's Package A is probably the least attractive of those so far allocated, with no first picks, 20 second picks and 12 fifth picks. BT is also paying more per match (£9.22 million) than currently (£7.62 million).
Sky is paying an average of £9.32 million per match, less than the current £11.05 million. Sky also has more matches: 128 matches rather than 126, including the Saturday and Sunday kick-off slots which generally get the biggest audiences. Sky would be allowed to bid for one of the two remaining packages.
The other rights, which may be awarded as soon as today, are Package F - 20 matches of Bank Holiday and midweek fixtures, and Package G - two midweek fixture programmes. These packages will allow the winner to air all ten fixtures simultaneously.
As these rights have not been allocated, we would assume that they will go for less than the average per match price so far achieved; in other words, less than £186 million a season. If the two remaining packages were to go for this price, this would mean a £5.6 billion total - a 9% increase on 2016-19.
We continue to see Sky and BT as the likeliest customers for these rights, given that it will be difficult for third bidder to get a return on their investment for this package by offering the matches on pay-per-view or subscription. Fans who already have to buy two packages to view the complete Premier League schedule would also baulk at buying a third package.
While not meeting the reserve price for two of its packages is a setback for the Premier League, it should be borne in mind that it enjoyed a 70% increase in its overall take for domestic rights in the 2016-19 contract cycle, and still has a round of international rights to sell (although deals in some territories, notably the US and China, have already been done).
The latest auction for Serie A rights was postponed for six months because of unsold packages, while there were also unsold packages after the first round of the auction for 2016-19 rights to La Liga. The upcoming deal for Ligue 1 rights in France has also been delayed.
These auctions speak of a maturing pay TV market in Europe where incumbent sports rights holders are no longer prepared to stake massive sums of money to try to knock out their rivals. Rupert Murdoch referred to sports rights as a battering ram. In the same siege warfare theme, they are now more like a defensive wall: an investment aimed at keeping rivals out and customers in.