UK’s pay-TV and broadband bundlers Sky Plc (LON:SKY) and BT Group plc (LON:BT) will be looking over their shoulders amid rumours that online streaming services are looking at the English Premier League.
It comes ahead of a planned Premier League rights auction which is anticipated next month.
Sky and BT currently share the TV broadcast rights in the UK for the Premier League. Together they have forked out the largest ever pay packet for English clubs, with the last round landing a total of £5.1bn for the clubs.
Interestingly for the league, however, the reports come in the wake of a recent content deal between Sky and BT which represented something of a de-escalation in the rights bidding war - essentially the agreement either group’s subscribers will be able to access the others coverage without subscribing to both.
City brokers expect the impact of the content deal to be deflationary for football rights, making future bidding rounds less expensive for the likes of Sky and BT.
“In our view, there are clear signs, most noticeably the recent BT-Sky content deal, suggesting the days of big price inflation for the UK domestic rights is over,” said Ian Whittaker, analyst at Liberum Capital.
Whilst headline making rumours suggesting Amazon or Netflix may be interested in acquiring sports rights may be counter to Liberum’s view that heat could come out of the broadcast rights business, Whittaker doesn’t believe it would be viable for the streaming services to go all in on football in the same way that Sky and BT have.
“There has been plenty of talk of the FANGs (Facebook, Amazon, Netflix and Google) entering the fray and buying some of the Premier League rights.
“For the most part, we think this talk is overdone (and probably promoted by the PL to try to push up the price).
“It is hard to see the economics working from an advertising standpoint and we do not think Google or Facebook would want to go down a mass subscription model. For Netflix, paying so much money for what would be just UK domestic rights would not make sense.”
Nonetheless, the analyst added: “we do think there is some logic to Amazon picking up one of the (minor) packages and rolling it into its Prime service with the aim of significantly boosting up take-up of Prime as Prime customers not only pay a subscription but also buy considerably more products (we understand that Amazon Prime customers’ purchase rate is at least 10x that of a normal Amazon customer and may be as much as over 20x).”