Covid-19 Sector Impact: Sports Broadcasting
by Patrick Kinch & Peter Scrimgeour
The wholesale cancellation of live sport worldwide as a result of the COVID-19 pandemic has left gaping holes in the schedules of some of the world's major sports broadcasters. In this report, Sportcal analysts Peter Scrimgeour and Patrick Kinch discuss the challenges broadcasters and rights holders face and the implications of COVID-19 halting all major sport.
20th May 2020, 17:20

Introduction

COVID-19 pandemic causing significant disruption and uncertainty for the sports broadcasting industry

The global value of sports media rights is estimated to be worth $50 billion with major sports reliant on broadcasting income. Walt Disney Co and Turner Sports secured the NBA rights for $23.4 billion over nine years, while Sky and BT acquired the domestic Premier League rights for $6.32 billion over three years. 

However, broadcasters of sports have been severely impacted by the COVID-19 pandemic, with leagues and major events all over the world postponed or even cancelled.

The year’s two marque events - Tokyo 2020 Olympics and Uefa Euro 2020 soccer championship – have both been postponed 12 months to the summer of 2021.

The suspension and cancellation of sports fixtures is leaving huge holes in schedules, especially for sports-only broadcasters, to fill. Numerous broadcasters are screening classic matches, archive content and esports, including the virtual competitions by suspended leagues, to appease viewers and advertisers.

Additionally, broadcasters are experiencing significant ad-revenue loss from COVID-19s impact on the wider economy, as brands have been reluctant to spend on advertising, especially the travel industry. This was highlighted by Discovery International Networks, which includes Eurosport, reporting a 4 per cent year-on-year fall in first-quarter advertising revenues for 2020.

In response to the pandemic, broadcasters have implemented numerous measures which include withholding payments for sports rights, furloughing of staff, borrowing money, invoking force majeure provisions, terminating rights contracts early and allowing subscribers to pause their accounts to limit cancellations.

As global broadcasters count the cost of the COVID-19 crisis, many industry experts are predicting a decline in the value of sports media rights in the near future.

 

United States | Disney and Turner - NBA 

Disney, Turner could lose $800 million in NBA advertising 

Walt Disney and WarnerMedia's Turner Sports secured broadcasting agreements with the National Basketball Association (NBA) for nine years, beginning with the 2016-17 season.

The two deals are worth a total of $23.4 billion, with Disney paying $1.4 billion per year and Turner $1.2 billion.

ABC and ESPN, which are part of Disney, televise 100 regular-season games per year, and TNT, which is owned by Turner, televise 67. The NBA Finals are exclusively on ABC.

The NBA was suspended on 11 March until further notice after a player tested positive for the coronavirus.

With the NBA heading towards the post-season, the loss of games is a blow to ABC, ESPN and TNT.

The leagues suspension could cause roughly $800 million in lost advertising for NBA broadcasters, according to MediaRadar. The advertising information company used ad spend data from March 2019 to May 2019, a period covering the end of the regular season and playoffs, to calculate its forecast.

Disney has to potentially fill 16 regular-season games across ESPN and ABC, as well as up to 44 playoff games, including the NBA Finals on ABC.

ESPN’s flagship network has been relying heavily on regular shows “SportsCenter,” “Get Up” and “First Take,” as well as hours of classic sports matches and archived content, while sister channel ESPN2 has been broadcasting a combination of ESPN and ESPNEWS programming.

A masterstroke by ESPN was to prepone the release of the “The Last Dance,” the much-anticipated documentary series about Michael Jordan and the 1990s Chicago Bulls. ESPN had previously planned to air “The Last Dance” in June, around the NBA Finals. But with no major sporting activities around the world amidst the pandemic, “The Last Dance” offered ESPN a big-audience event that suddenly become more unique, with the 10-part series pulling in strong audiences and generating considerable buzz across social media.

TNT, an entertainment network with some premium sports properties, has to potentially replace 14 regular-season games and up to 40 playoff telecasts. The network can fill the absence of live NBA games with entertainment programming such as films, dramas and original series. 

TNT have been screening their own basketball docu-series “Shaq Life,” which is centred around four-time NBA champion Shaquille O'Neal's life. Like ESPN, TNT decided to debut the series earlier than planned on 9 April in response to programming shifts due to the NBA season suspension. 

 

United States | NBC - Olympics 

NBC had sold a record $1.25 billion in national advertising for Tokyo Olympic

NBC, the Comcast-owned television network, secured United States media rights to four Olympic Games from 2014 until 2020 in a deal worth $4.38 billion in 2011. Three years later, NBC agreed to pay $7.75 billion to broadcast the Olympics through to the 2032 summer Games.

The deals cover various platforms including free-to-air television, pay television, internet and mobile distribution.

Tokyo 2020 was postponed on 24 March by one year from July 2020 to 2021, the first such delay in the Games’ 124-year modern history, due to the COVID-19 crisis.

In early March, Chief Executive Brian Roberts disclosed that Comcast has insurance that will cover expenses related to the postponement of the Olympic Games.

"There should be no losses should there not be an Olympics," Roberts said at the time. "There just wouldn't be a profit (from the games) this year."

The same month, NBC revealed it had sold more than $1.25 billion in national advertising for Tokyo 2020, a new record for any broadcaster of the Olympics, with nearly 90 per cent of its ad inventory for the games having been booked.

The previous record, of $1.2 billion for the 2016 Rio Olympics, was also held by NBC.

Renegotiating with the Olympics advertisers, who likely paid a premium rate, is not the only headache for NBC.

Other effects include figuring out what to broadcast during the 17 days the games would have aired and the launch of the company's upcoming streaming service.

NBC was planning to present around 7,000 hours of programming from Tokyo 2020 across both NBC’s traditional broadcast networks and the company’s digital platforms. The postponement of the games has left a substantial programming hole to fill.

Peacock, NBC’s new ad-supported streaming service, had been planned to launch nationally on 15 July to take advantage of the Olympic hype and help push for new subscribers. Losing the marquee event to help promote Peacock this summer is a big blow for a new service.

In a conference call with analysts at the end of April, Comcast reiterated that it does not expect financial losses from the postponement of Tokyo 2020.

 


 

Europe | Discovery - Olympics 

Discovery borrows $500m under its credit facility to boost its cash position 

Discovery Inc., the parent company of Eurosport, agreed to pay €1.3 billion ($1.45 billion) for the broadcasting rights in Europe to the Olympic Games from 2018 to 2024, beating national public broadcasters that have traditionally shown the event.

The exclusive agreement comprises all TV and multi-platform broadcast rights in 50 European territories (excluding Russia) for four Olympic Games: PyeongChang 2018 winter Olympics, Tokyo 2020 Olympics, Beijing 2022 winter Olympics and Paris 2024 Olympics.

Tokyo 2020, the first summer games in Discovery’s deal with the IOC, were postponed on 24 March by one year from July 2020 to 2021, due to the COVID-19 crisis.

Responding to the news, Discovery announced that the company “fully supports the IOC and the Tokyo 2020 Organizing Committee’s plan to stage the Olympic Games in 2021.”

During an earnings call to reassure investors prior the Olympic Games postponement, Discovery had stated it had insurance to protect itself from a loss of revenue if the Olympics didn’t proceed in 2020. Gunnar Wiedenfels, Discovery’s chief financial officer, suggested that a cancelled Olympics was “not going to have any adverse impact on our financials.”

Discovery expects that the postponement of the Olympic Games will shift Olympic-related revenues and defer significant expenses from fiscal year 2020 to fiscal year 2021.

Revenues at the international networks arm of Discovery, which includes Eurosport, slipped 3 per cent year-on-year for the first three months of 2020, as the pandemic started to have an effect on advertising and distribution-based income.

For the first quarter of 2020, Discovery International Networks generated overall revenue of $923 million, compared with $952 million for the first quarter last year.

During March, Discovery drew down $500 million under its $2.5 billion revolving credit facility to boost its cash position and maximize flexibility during the pandemic, and simultaneously withdrew its fiscal outlook for 2020, citing the unknown impact of the virus on its financial results.

 



France | TF1 and M6 - Euro 2020

TF1 and M6 ask to defer 65 per cent Euro 2020 rights payments

TF1 and M6, the French free-to-air commercial broadcasters, teamed up to acquire a package of rights to the 2020 Uefa European Championship, for a combined €50 million ($54 million) fee in November 2019.

The agreement includes free-to-air rights to 23 matches in total; TF1 showing 12 games including the opening match and M6 showing 11 games including the final.

On 17 March, Uefa postponed Euro 2020 by 12 months as a result of the ongoing COVID-19 pandemic. The tournament, due to take place from 12 June-12 July this summer, will now run from 11 June to 11 July next year.

With the tournament being pushed back to 2021, TF1 and M6 have reportedly asked Uefa if they can postpone the remaining 65 per cent of their rights payments, which is due to be paid in full by the start of June, until next season. The duo have already paid 35 per cent of the combined €50 million fee.

The broadcasters have apparently not yet received a response from Uefa.

 

 

United Kingdom | ITV - Euro 2020

ITV to save £50m from Euro 2020 postponement 

In 2015, the BBC and ITV, the UK public-service and free-to-air commercial broadcaster, respectively, secured a rights agreement for the 2016 and 2020 Uefa European Championship, paying a combined £280 million ($216 million) fee.

In early March, ITV warned of difficult advertising conditions ahead as a result of the COVID-19 crisis. Advertising demand in 2020 had already been hit by the pandemic, with ITV predicting a 10 per cent decrease in April. The broadcaster was pinning hopes on Euro 2020 in summer to win audiences and drive up advertising revenue.

On 17 March, Uefa announced the postponement of Euro 2020 by 12 months. ITV responded by saying the direct impact would be to reduce its schedule costs in 2020 by £40 million to £50 million, including the cost of replacement programming.  However, shares in ITV were down more than 13.5 per cent in afternoon trading.

In early May, ITV revealed the scale of the impact of COVID-19 as advertising slumped 42 per cent in April, forcing the broadcaster to take measures including furloughing 800 staff and reducing overhead costs by £60 million this year.

 

 

 

France | Canal Plus and BeIN Sports - Ligue 1

Canal Plus and BeIN Sports refuse to pay €280 million Ligue 1 rights fees

Canal Plus, the Vivendi-owned pay-TV broadcaster, and BeIN Sports, the Qatari-owned pay-TV network, secured the major domestic broadcast rights to Ligue 1 from 2016-17 to 2019-20 in a deal worth €726.5 million ($1.0 billion) per season.

In the 2014 auction, Canal Plus paid €540 million per year to keep the top games, while BeIN paid €186.5 million per season.

The LFP, the French professional soccer league, decided on 13 March to suspend Ligue 1 immediately until further notice due to the COVID-19 pandemic.

With the suspension of the competition, both Canal Plus and BeIN announced they would not pay the next instalments of their TV rights contract, worth €110 million and €42 million respectively, due on 5 April. In total, €280 million was owed to the league from the broadcasters by the end of the 2019-20 season, with a final payment from the pair due on 5 June.

The LFP insisted that Canal Plus still owed money despite the suspension of fixtures because 28 of the 38 matchdays, or 73.7 per cent, had been completed. The LFP said Canal Plus had only paid for 67 per cent, meaning it owed €43 million. Based on that calculation, BeIN owed €15 million.

Following a three-week long spat, Canal Plus, BeIN and the LFP, announced on 24 April they had reached agreement over the terms of their media rights contract regarding fixtures that were fulfilled before the mid-March suspension. The settlement with the LFP resulted in Canal Plus paying €37 million and BeIN €10 million.

On 28 April, the French government extended the ban on professional team sports until the end of August, effectively ending the Ligue 1 season. The step was taken to prevent a second wave of the virus.

Two days later, Canal Plus terminated its four-year rights contract, which expired at the end of the season, with the LFP. BeIN has yet to make an announcement, but is thought likely to follow suit.

The LFP then proceeded with plans to take a state guaranteed loan, reported to be worth €225 million, in order to pay Ligue 1 clubs the remaining money they are owed from this season's media rights contracts.

 



United Kingdom | Sky and BT - Premier League

Sky and BT owed £371 million if Premier League cancelled 

In 2018, pay-TV broadcasters Sky and BT secured the majority of live televised Premier League rights, paying £4.554 billion ($6.327 billion) for six of the seven packages of matches from 2019-20 to 2021-22. The deal sees Sky Sports showing 128 live games a season at a cost of £3.579 billion ($4.972 billion) over three years, and BT Sport 52, paying £975 million ($1.354 billion). Amazon, the US online retailer, acquired the remaining rights package.

The Premier League was suspended on 13 March due to the COVID-19 crisis.

With a combined 92 matches left to play in the 2019-20 campaign, the Premier League calculated it will cost them £762 million in lost broadcast revenue from domestic and international broadcasters if the season fails to finish as a result of the pandemic.

With 47 games still due to be shown on Sky Sports and BT Sport, £371 million in TV money would be owed to Sky and £50 million to BT if the season was cancelled. However, it has been reported that Sky will not demand to be repaid, and would rather find alternative ways to make good any lost value in a worst case scenario.

To limit cancellations, Sky has stopped charging commercial clients such as pubs, while residential pay-TV subscribers can “pause” their payment. BT is offering to credit accounts until normal service is resumed, while customers on its flexible pay-TV package can elect to drop sport.

Sky and BT will lose over £900 million in revenue if leading sports remain out of action until August, according to a research report by Enders Analysis.

“Assuming a worst-case scenario of a four-month suspension of all sports coverage (British and foreign), with all sports subscribers pausing their contract and wholesale clients being allowed to follow suit, Sky would lose £700 million and BT £228 million in revenues,” Enders said.

However, the report noted that beyond July both broadcasters will start saving money if sport remains off screens as upcoming rights payments would be postponed or cancelled. Sky and BT are due to pay the Premier League the rights fee for the first half of the 2020-21 season, which amounts to about £530 million in total, in July.

 


 

Australia | Foxtel and Nine - NRL

Foxtel and Nine decline to make A$75 million rights payment in April 

Foxtel, the pay-television operator, and Nine Network, the free-to-air commercial broadcaster, hold the current National Rugby League (NRL) broadcast rights, paying A$1.80 billion ($1.38 billion) across five years in 2015. The deal, which commenced in 2018, sees all matches shown live on Foxtel’s pay-television service Fox Sports, with Nine also broadcasting Thursday night, Friday night and Sunday afternoon football.

Additionally, from 2017, Fox Sports has provided a dedicated rugby league channel.

On 23 March, the NRL suspended its 2020 season indefinitely after only two rounds due to the COVID-19 pandemic.

The suspension of matches resulted in broadcast partners Foxtel and Nine declining to make their quarterly rights payment of a combined A$75 million in April. This in turn, led to the NRL securing a A$250 million loan from British banks to stop the game falling into financial ruin.

With the pandemic causing disruption and uncertainty for the broadcast industry, it was reported in mid-April that Foxtel and Nine began negotiations with the NRL over signing a three-year extension to the current deal, which is set to finish at the end of 2022, while also renegotiating the final two years of the current cycle. The new deal would be worth less than the current arrangement, which generates A$325 million a year for the league, and would extend the game’s television partnership to the end of 2025.

The NRL on 28 April, announced plans to recommence as a 20-round competition on 28 May with the Grand Final to be played in late October, while the State of Origin series is being moved to November. The details were confirmed after “extensive consultation” with the league's broadcast partners, clubs and key stakeholders.

However, Foxtel and Nine are now seeking reductions in their rights fees owed to NRL this year because of the reduced calendar. Foxtel wants a discount of A$53 million from the A$190 million it is contracted to pay in 2020, while Nine wants a reduction of A$28 million from the contracted A$118 million it owes. Both broadcasters believe they will not be able to recoup sufficient revenue amid the weak advertising market, while Nine is also concerned about the NRL postponed season clashing with the men’s T20 World Cup, scheduled to be played in October and November, whose broadcast rights they also own.



 

India | Star – IPL

Star were eyeing  $445 million in IPL advertising revenue 

Star India, the Disney-owned pay-television network, secured the domestic and global rights to the Indian Premier League (IPL) for five years in a deal worth Rs163.475 billion ($2.554 billion).

The agreement, which commenced in 2018, sees Star pay the Board of Control for Cricket in India (BCCI) around Rs32,695 billion ($510 million) per year for the rights.

This year’s IPL was originally due to start on 29 March but was pushed back to 15 April and subsequently postponed indefinitely after India extended its national lockdown.

According to Business Today, Star had sold more than 75 per cent of its tournament inventory by January, and was eyeing Rs33,000 billion ($445 million) in broadcast and digital advertising revenue this year.

With no sports to screen, Star have had their request for the BCCI to share access to its massive archive of cricket footage accepted, due to the broadcasters importance as a commercial partner. Meanwhile, the BCCI has informed Star that it is invoking the ‘force majeure’ clause in its contract should there be a suspension or cancellation of this year’s IPL.

 

 

 

Japan | DAZN – J.League

DAZN to withhold rights fee payments, J.League say “no change” to contract 

DAZN, the international over-the-top streaming service, secured a 10-year, ¥210 billion ($1.972 billion), domestic rights agreement to screen Japanese soccer’s top-tier J.League from 2017.

The J.League has been suspended since 28 February due to the COVID-19 pandemic.

In In late March it was reported that DAZN had alerted rights holders, including the J.League, that it will not make rights fee payments for any future events or matches in competitions that have been suspended, postponed or cancelled, and that it would only pay for games played.

J.League Chairman Mitsuru Murai said there was "no change" to the 10-year, $2 billion contract between the league and DAZN, which he called an "important partner.“

Other “survival mode” measures taken by DAZN include the furloughing of an unspecified number of employees worldwide, delaying the global roll out of its platform in more than 200 territories from May to later in the year and allowing subscribers to pause their accounts for up to four months to limit cancellations.

DAZN was in the process of trying to raise at least $500 million when the pandemic hit. 



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Broadcasters and sports deal summary