Market Insight

Amazon and BT buy remaining Premier League packages

June 07, 2018

Tim Westcott Tim Westcott Director, Research and Analysis, Programming

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Continuing its move into live streaming sport, Amazon has acquired a package of rights to the Premier League in the UK from 2019 to 2022. Amazon was awarded a package of 20 live matches per season, including 10 played on a public holiday (possibily Boxing Day) and 10 in midweek. Completing a long-drawn out process that began with the award of rights to Sky and BT in February, the Premier League awarded the last remaining package to BT.

BT added package G, consisting of 20 matches a season played in midweek, to the 32-match package it was awarded in February. The telco said it would pay £975 million ($1.3 billion) in all, implying a cost of £90 million for package G. 

Amazon has not disclosed the cost of its package, which includes, for the first time, the rights to make an entire programme of Premier League matches available. Reports have suggested Amazon will show some of its matches on Boxing Day. It is expected that the matches will be offered as part of an Amazon Prime subscription.

The Premier League also announced that in Ireland, in addition to the rights already awarded to Sky and BT, Premier Sports will have the rights to 33 matches a season kicking off on Saturdays and 3pm (these matches are not available for broadcast in the UK) as well as the 20 matches awarded to Amazon in the UK. 

Our analysis

The sale of rights to Amazon is a definite coup for the Premier League, which has a clear interest in broadening the field of prospective bidders for its domestic rights. However, as we said in our insight report, What price a bid for Premier League rights by the technology giants?, it was very unlikely that Amazon would outbid one of the incumbent pay TV rights holders. The lengthy negotiations for the remaining two packages bears out this view.

BT's payment of £90 million for 60 matches over three seasons works out at £1.5 million per match, compared to an overall £10.19 million per match in the 2016-2019 contract. The overall take from domestic live rights for the clubs was £5.136 billion in 2016-19. If we assume Amazon paid a similar amount to BT, this equates to £4.644 billion for 2019-2022, a decline of just under 10%. The average cost per match would be £7.74 million, a decline of 24%.

We are still of the view that the outcome of the rights auction is still very favourable for the clubs, given that the 70% increase in UK rights in 2016-19 would have been a tough act to follow. Sky will pay 14% less than it did in 2016-19, while BT will pay 1.6% more. However, by renewing their deals for rights, both companies have indicated that owning some exclusivity to the Premier League is still vital to their businesses. While Sky management has spoken recently about dropping some sports rights from its portfolio to save money, this is unlikely to include the Premier League.

While Amazon is a global player for which overpriced rights restricted to one territory are of doubtful value, it is clearly prepared to make an exception if it can acquire rights at what one source quoted today called a 'knockdown' price. A programme of Premier League matches seems unlikely to attract huge numbers of new Amazon Prime customers, but is more likely to act as a loyalty bonus for existing members. The offer of live matches on Boxing Day (a public holiday in the UK) will also act as a valuable promotional window for other Amazon video content. Amazon also has rights to US Open tennis in the UK and Ireland from this year.

The new rights split means that, in theory, fans will have to have three separate subscriptions to be able to watch the entire Premier League programme. However, from the start of next year, BT and Sky will allow each other to wholesale their sports channels, and BT will add Amazon Video to its offering this year. As the UK pay TV market reaches maturity, the rights award also highlight a change in the position of premium sport from a tool to sign up new customers to being a tool to retain existing ones.

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