Premier League to Test Pay-TV's Value

Article excerpt

What will pay-per-view football offer UK advertisers and viewers?

On Sunday, August 19, the UK's four main digital pay-TV platforms -- SkyDigital, ITV Digital, NTL's Premium TV and Telewest -- will launch Premier League soccer pay-per-view (PPV).

Although each platform will make its own decisions about how to price, present and support the service, the core offering on each is the same.

Over the course of the 2000-2001 season there will be 40 live games, most of which will kick off on Sundays at 2pm. Coverage of every game, starting with Chelsea versus Newcastle, will be produced by Sky, which won the [pound]2.5m production contract in July.

The PPV rights, which were granted to the digital platforms by the Premier League in a [pound]180m three-year deal, come on top of two existing contracts. The first resides with Sky, which is paying [pound]1.2bn over three years for exclusive access to 66 live pay-TV games. The second is with ITV, which paid [pound]183m over three seasons for Premiership highlights.

The Premier League deal is the first real attempt to build a PPV sports market in the UK. Although digital subscribers are familiar with PPV music and movies, the only sports to have gone down this route in the UK so far are boxing, cricket and Nationwide League soccer, which Sky trialled in 1999 (see box).

Fielding accusations

When Premier League PPV launches it will probably attract the same criticisms levelled against SkyDigital when it launched PPV movies: that it is using its clout to get more money out of consumers.

This accusation is wide of the mark. First, while broadcasters might benefit financially from strong PPV sports, the true driving force behind the creation of a PPV window in this case is the rights holder. The Premier League has made no secret of its desire to wring more money out of all its assets, including sponsorship and international rights.

Second, viewers only pay for additional content. In the case of both soccer and movies, PPV is providing content they would not otherwise be able to watch on TV. Existing deals are not affected, either in terms of the quality or quantity of games.

In the case of the Premiership, NTL originally agreed to pay the league [pound]328m for the exclusive rights to the 40 games in question.

But when this deal fell through because of contractual disagreement, the four pay-TV channels joined together to pay for equal non-exclusive rights to the 40 PPV games.

Sky, as ever, has led the field with its PPV plans. From the start of the season, its customers will be able to access its Premiership Plus service either by purchasing a season ticket for [pound]60 ([pound]50 in July) or by paying for individual games at [pound]8 each. This is on top of the 66 games that Sky will broadcast under its exclusive pay-TV contract.

The other platforms will probably pitch PPV at around the same price as Sky -- although lower subscriber numbers means that the cost of renting transponder space and promoting the games will eat up a greater percentage of the money they take.

While SkyDigital has a potential audience of five million homes, digital cable and digital terrestrial both have between 1.1 million and 1.3 million homes at which to aim.

How well PPV soccer will do remains to be seen. Aside from the additional cost to the viewer, there are at least two factors that may work against take-up.

First, Sky gets to pick the best two games for its own pay-TV service each week, making the PPV option the third choice.

Second, the Sunday PPV game precedes the Sky pay-TV game -- creating a four-hour block of soccer. Most fans will find it hard to resist channel-hopping for that amount of time.

Bill Sinrich, managing director of IMG-owned sports producer TWI, says 5% to 10% buy-rates will be seen as very good for the platforms. …