'Financial discipline' means Telefónica could drop Champions League
Telefónica, the Spanish telecoms giant, has warned that it may stop providing television coverage of the Uefa Champions League next season if the financial demands are too onerous.
There is also the possibility that Movistar Plus, its subsidiary pay-TV operator, will not retain rights to the domestic LaLiga if they are considered overvalued.
Telefónica is expected to enter negotiations with Mediapro, the Spanish sports rights agency, this summer regarding continued carriage of the channels that showcase Champions League matches, but there is no guarantee of a deal.
Last July, Mediapro and its partner BeIN Sports, the international pay-TV operator, consolidated their hold on European soccer’s top clubs competition by landing exclusive rights in Spain for the next three seasons in a deal valued at a total of €1.05 billion ($1.29 billion), and which also includes the second-tier Europa League, outbidding Telefónica in the process.
Speaking at the presentation of the company’s 2017 results yesterday, chief operating officer Ángel Vilá said: “There is a clear possibility of not renewing the contract. We are going to be extremely rational and we are going to act with financial discipline. We will analyse the cost benefit and act accordingly.”
Vilá has hit out at what he regards as scenarios “of exuberance and excess” in the acquisition of TV rights.
The increase in the value of the Champions League and Europa League rights (the present deal with Mediapro, Atresmedia and Catalonia's TV3 is worth just under €600 million over three years), has put pressure on Mediapro to secure a significant return from carriage deals for the BeIN Sports channels that show the matches.
However, it was reported last November that Telefónica, Orange and Vodafone would not be prepared to charge their pay-TV customers over €50 per month to balance the books.
Telefónica has played hardball on the issue before, declining to provide coverage of the first phase of the Champions League in the 2015-16 season before agreeing a €2.4-billion deal to sub-license the BeIN Sports channels showing the competition and LaLiga.
That deal runs until the end of this season in the case of the Champions League service, and until the end of the 2018-19 campaign in the case of the LaLiga channels.
Separately, Movistar Plus, which has around 3.8 million customers, shows premium LaLiga matches itself in a three-year deal worth €750 million that expires next year, and was expected to participate in the forthcoming auction for the rights to the 2019-20 season onwards.
However, Vilá raised doubts about this yesterday, saying: “The key issue is the conditions of minimum prices.”
The other main live rights package is presently held by Mediapro and BeIN Sports in a three-year, €1.9-billion deal.
Citing recent soccer league rights processes in other countries, Vilá said: “There have been auctions in the United Kingdom and Portugal with prices down, which is the direction in which it has to go.”
However, he did raise the prospect of potentially joining forces with an internet company, such as Amazon and Facebook, to show soccer in the future.
LaLiga president Javier Tebas has claimed that the league will be looking to generate €2.3 billion ($2.7 billion) per season from the sale of broadcasting rights in the next cycle, comprising €1.3 billion from the domestic market and €1 billion internationally. He said last week that the domestic auction would take place between March and May, "at the latest."
Laurent Pallaissot, the chief executive of Orange Spain, had his say on the issue yesterday, stating: “The problem is not football, which interests us all; the problem is the price of football.”
Telefónica announced adjusted core profits of €4.2 billion for the fourth quarter, down 5.2 per cent on the previous year, in line with analysts' forecasts.
Sales rose 5 per cent on an organic basis to €13.2 billion although revenues were flat in Spain as an increase in service income was offset by lower wholesale and mobile phone terminal sales.
Telefónica is anticipating a 1-per-cent rise in revenues and increased profits in 2018.
Chairman and chief executive José María Álvarez-Pallete López said: "In 2017, we have delivered solid results. We have met the guidance set for 2017, which was upgraded in July. We have entered 2018 with clear priorities to execute our strategy, with revenue growth, margin expansion for the third year in a row and lower capital intensity thanks to the efforts already undertaken."