The German football league has suspended its media rights auction after protests by DAZN over the award of the top package.
DAZN surprised the market by aiming to become the Bundesliga’s primary broadcaster.
The situation in Germany reveals the contradictory impulses weighing on leagues at rights auctions.
The German football league’s rights tender for its 2025-29 cycle is designed to create competitive tension between Sky and DAZN.
Based on precedents and public statements, we would expect Sky to increase coverage and DAZN to scale it down without a head-on bidding battle.
With low international potential, the Bundesliga can only count on its deep fan base to meet competitive pressure from the Premier League.
The US is intent on preventing the CCP’s goal of AI supremacy by 2030, banning exports of advanced AI chips to Chinese companies. So far, these bans have largely been shrugged off to create a new commercial dynamic in the region.
Huawei wields a de facto monopoly on the manufacture and sale of advanced chips in China. Huawei also sells cloud services globally and threatens Apple's $70 billion in Chinese revenues through its premium handsets.
China’s AI regulation is highly supportive of the training and deployment of Chinese-language LLMs developed by tech platforms, startups, and device makers, with meaningful revenue gains only appearing by H2 2024.
The value of the domestic rights of major European leagues is falling due to the declining competitive intensity between broadcasters.
The Premier League’s new rights deal extends its lead, while Serie A faces a 10% fall in revenue next season and Ligue 1 struggles to get a flat fee.
Sky and DAZN have cemented their status as Europe’s top football broadcasters. Amazon has refocused to one game per week.
21st Century Fox and Sky plan to notify their proposed merger to the European Commission, perhaps by March, and obtain clearance on competition grounds, as rapidly as in 2010.
The merger could also face, along the lines of 2010, a separate regulatory process in the UK on media plurality grounds, by a decision of Secretary of State Karen Bradley.
If the UK process happens, Ofcom will provide its advice on the merger’s impact on news and current affairs, whose consumption has shifted massively online since 2010.
With the decline in its subscriber base accelerating and following an antitrust veto over its planned tie up with BeIN Sports, Canal+ has decided to radically restructure its retailing on IPTV – where over 60% of subscriber recruitment takes place
The basic channel package is now wholesale to ISPs and included in upper tier triple play bundles – much higher volumes should more than balance a deep price cut. Soon premium and optional packages are to be unbundled on all platforms to create cheaper entry points and favour subscriber customisation
Canal+ is thus increasingly focused on supplying premium content, leaving the user interface to ISPs. Without the scale of other international content producers and in a nationalistic political context, we believe that this market rationale will eventually lead Vivendi to sell Canal+ to Orange
FY 2016 has been an excellent year, with all three Sky markets showing improved performance as Sky delivered 7% revenue growth (5% after adjusting for 2016 being a 53-week year) and 12% increase in operating profit
The success reflects Sky’s commitment to product and service innovation and diversification in an increasingly fragmented marketplace combined with tight control of back office costs and focus on synergies
As a measure of its success, Sky has set new cost synergy targets of £400 million annual run-rate by FY 2020 and is aiming for continuing middle to high single digit growth in revenues, which should let it comfortably absorb the rising costs of Premier League and Bundesliga live televised rights under the next contracts
The award of the match packages in the 2017-21 domestic football rights auction in Germany is probably optimal for Sky (within the “no single buyer” constraint): it will broadcast about eight out of nine weekly fixtures including the top picks, while Eurosport’s package is complementary to Sky’s rather than substitutional
Sky will, however, pay a hefty price, with the new contract costing 80% more than the current one – although the new Bundesliga rights value is not out of line with other Continental leagues
We expect Sky’s German operations to briefly break even in fiscal 2017 before falling back into losses with a return to profit if other costs are kept under control. Management has made a bold statement of self-confidence: building scale is the priority
At present, Sky exclusively holds all pay-TV domestic live rights to Germany’s top football league. The 2017-2021 rights auction will conclude in early June. It contains a new soft ‘no single buyer’ clause referring solely to online rights
Sky’s real threat comes from potential bids for the main TV packages by deep-pocketed telecom or digital platforms. This could see Sky losing games and shouldering significant cost increases
We think Sky’s German operations will break even by fiscal 2017. Beyond this, profitability is heavily dependent on the auction’s outcome. If it were to retain all live rights, Sky could afford to increase Bundesliga costs by up to 40% over the four-year period. Anything beyond this would lead to Sky making losses