Dispute over Internet rights settled; Premiere left out in the cold

BERLIN — In the run-up to Friday’s soccer World Cup kick-off, telco giant Deutsche Telekom and the German Football League (DFL) on Wednesday (June 7) buried the hatchet on a months long dispute over Internet rights and inked a new sponsorship agreement, all to the detrement of pay TV broadcaster Premiere.

The paybox saw its shares tumble to their lowest ever Wednesday following news that it would not be able to broadcast top league Bundesliga soccer over satellite and cable.

Upstart rival channel Arena nabbed Bundesliga pay TV rights last year, but Premiere had hoped to expand an Internet broadcast agreement it has with Deutsche Telekom.

CEO Georg Kofler had even hinted that an Internet Protocol TV (IPTV) deal for cable and satellite was immi-nent.

Deutsche Telekom, however, hammered out a deal with the DFL, agreeing not to use its soccer Internet rights for satellite and cable broadcast. In return, the telco, Europe’s biggest, will get the option to sponsor the Bundesliga from next year. The group has seen its fixed-line phone service revenue steadily shrink that past few years and is eager to expand its digital assets as its seeks new sources of revenue.

Walter Raizner, a member of Deutsche Telekom’s management board, said the planned sponsorship of the Bundesliga would help the company attract more customers for its Internet offering.

Premiere suffered a second defeat Wednesday after Arena won Bundesliga rights for bars and restaurants for the next three years. Until now, Premiere also had long controlled those rights.

Last month Premiere and Deutsche Telekom agreed to share Bundesliga Internet rights for the next three seasons, with Premiere producing soccer programming for the telco’s online coverage. The companies said at the time they would keep open the option to use the Internet signal for satellite and cable broadcasts, prompting concern from Arena and the DFL.

Taking the blow to his company in stride, Kofler was optimistic: “I am utterly convinced that IPTV will appeal to the mass market in the coming year, especially for the technically-attuned public, which the majority of Premiere subscribers are.”

Kofler pointed out that the loss of the Bundesliga meant annual savings of some Euros 200 million ($256 million).

Premiere shares dropped 6.4% to $11.47 in Frankfurt Wednesday. It was its lowest showing since the company’s initial public offering last year, when share traded at more than $40.

Sport has become Premiere’s staple programming and the Bundesliga were the paybox’s top asset before losing out on the upcoming season, which kicks off in August.

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