The Berlusconi family-backed MediaForEurope’s (MFE) public offer may not be taken up by many ProSiebenSat.1 (P7) shareholders, but will allow it to raise its stake to above 30%.
Without a core shareholder, ProSieben has flipped-flopped through unsuccessful strategies to meet the digital transition challenge.
MFE believes that European commercial television must build cross-border scale to compete with global streamers.
Germany’s RTL+ streaming platform has been revamped into an 'all-in-one' bundle of content including premium sports, music and audiobooks.
RTL wants to leverage its FTA reach to build an online subscription base large enough to influence the future shape of German TV.
To sustain subscriber growth we argue that RTL will need to release defining content and explore partnerships beyond its current deals with telcos.
A cooler consumer market sees Sky now facing the same pressures as its SVOD competitors, with a loss of pay-TV subscribers in the UK.
However, Sky is performing better in telecoms in both the UK and Italy. These markets are less susceptible to recession with Sky also benefitting from its position as more of a challenger than an incumbent.
Uncertainty continues to loom over both the sale of its German platform and the upcoming allocation of Serie A rights in Italy.
The Warner-Discovery and TF1-M6 merger plans have dramatically pushed consolidation up European commercial television’s agenda.
The first path—heralded by Bertelsmann’s RTL Group—would aim at creating
national broadcasters with the content scale to operate compelling online platforms.
An alternative path revives the never achieved idea of pan-European synergies,
leveraging increased international appetite for non-English language content—but
its champion, Italy’s Mediaset, lacks capacity to deliver.
After a strong post-pandemic rebound, Sky has the opportunity to leverage its strong reputation with consumers to meet the challenge posed by new competitors and the studios’ direct-to-consumer transition, establishing Sky Q as the ultimate gatekeeper of video subscription homes.
Sports rights costs in Germany and Italy have been cut significantly, while Sky’s spend on UK Premier League rights will decrease in real terms. Savings will ease the financing of the shift to original content, which, associated with owner Comcast’s NBCU output, anchors the aggregation strategy.
Fibre deployment in the UK and Italy presents a subscriber and revenue growth opportunity, and underpins the gradual shift away from satellite to online content distribution.
In a bold attempt to expand, DAZN has won Serie A rights for 2021-24.
With a worst-case scenario of 14% decline in revenue from domestic rights, the Italian league will limit losses, but runs the risk of more long-term damage.
Sky takes a calculated risk, and sends strong messages.
The COVID-19 crisis is compounding the already grim revenue prospects for upcoming football rights sales in continental Europe.
The financially weakest leagues in Italy and France are especially exposed. Serie A is exploring deals with private equity firms, with the pros and cons finely balanced.
There is a window of opportunity for Sky and Canal+—the adults in the room—to build coalitions with selected clubs to nudge leagues towards needed reforms including longer licence terms, reducing the number of clubs and more equal revenue splits.
When we look back at consumer expenditure on pay-TV and alternative entertainment options during past economic downturns across major countries, we find a broad confirmation of the industry’s comparative resilience.
Also found are variations between services sold through annual contracts and cancel-anytime rivals, a negative impact on big-ticket products, and opportunities for substitutional services.
Unique features in the current crisis include the suspension of sport broadcasts and an SVOD-rich offering which widens consumer options. If hardship persists, incumbents like Sky could face tougher times than during the financial crisis.
In a likely scenario, the suspended football season could be concluded in empty stadiums in a June and July rush, nevertheless with severe financial consequences.
Pay-TV incumbents like Sky face limited risk—at worst they lose four months of subscription revenue for games already paid for. No-contract services such as DAZN must anticipate a more severe shock.
To limit disruption, pain will have to be shared across the supply-chain with players’ pay first in line. But fast coordination in a continent-wide, multi-layered industry is challenging; in places, the issue may turn political.
Comcast’s new, on-demand service, launching in April, is an attempt to break NBCU’s unsustainable dependence on sales to Netflix and other SVODs. Peacock provides a path of digital transition for advertising-funded TV with a revamped low-load, high cost-per-thousand model.
Reach will be built with a free online tier and distribution to Comcast subscribers. Peacock seeks carriage from other pay-TV operators, with which reciprocal deals would make sense (i.e. HBO Max on Comcast alongside Peacock on AT&T’s platforms).
In Europe, where Comcast has no existing major free-TV offering to transition, launching Peacock will be challenging but could present Sky with ideas to counterweigh Netflix on its own service.