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Soccer gets ugly

Europe roars as Kirch ups World Cup rights price

LONDON — Negotiating TV rights to World Cup soccer, known as the beautiful game, has become an ugly business.

The international crown jewel of sports broadcasting is the subject of a bloody battle between German media giant Kirch and Europe’s broadcasters. So messy is the conflict that even governments have been dragged into the fray.

In 1996, Kirch agreed to pay soccer’s governing body FIFA $500 million for European rights to the 2002 World Cup, and $600 million for the 2006 tournament, nixing the old system of selling direct to the industry.

The European Broadcasting Union, the org that reps Europe’s established broadcasters, used to oversee the parceling out of the rights, and in 1998 the World Cup cost the European TV biz a mere $135 million.

Now Kirch is after at least that amount from each of the big five markets — Germany, Britain, France, Italy and Spain.

British battle

Kirch’s biggest problem is the U.K. FIFA dictates that the Cup’s opening match, matches involving the home team, the semifinals and the finals (typically 24 of the 64 matches on offer) be free in every European territory.

But the British government is unique in demanding the entire Cup be free.

Kirch is challenging the legality of that and is pitted against pubcaster the BBC and commercial broadcaster ITV, who have shared the rights since 1966 when England won the World Cup.

Prisma, the Kirch subsid that negotiates the World Cup deals, has rejected a $60 million joint bid from the BBC and ITV, a fraction of what it is seeking, and decries the BBC/ITV alliance as a cartel.

Most observers consider the BBC/ITV combo the only game in town. Nevertheless, Kirch may try to split the partnership.

“There’s a chance we’ll do an auction, and if we take that route we’ll only sell the live rights,” says Richard Dorfman, Prisma’s senior VP for television.

That would trigger a legal battle. And Britain’s two biggest broadcasters would not be satisfied with the live rights.

The 2002 World Cup is being held in Japan and Korea. Because the matches will be played very early morning European time, the rebroadcast and highlights rights are more important then usual.

“I think it’s impractical for a broadcaster to tell the World Cup story with just live rights,” says Brian Barwick, controller of sport for ITV. “ITV and the BBC have an ambition to transmit the World Cup, but we won’t do it at any price.”

Germany was recently facing a similar problem.

It took Chancellor Gerhard Schroeder’s intervention to seal a $103 million deal with pubcasters ARD and ZDF after they reached stalemate with Kirch. The 1998 rights cost $8.5 million.

But ARD and ZDF picked up only 25 of the 64 matches available.

Among its myriad media interests, Kirch is also a pay TV broadcaster. It will likely place the remaining matches with Premiere World, its struggling pay channel.

Reigning in Spain

Spain’s Via Digital pay platform agreed a $150 million deal for all the World Cup rights two years ago and has sold the majority of the guaranteed free matches to pubcaster RTVE.

The final matches, and potentially most lucrative round for advertising sales, have yet to be adjudicated: How much more will RTVE or another free player have to pay?

Meanwhile, Italian pubcaster RAI has protested about Kirch’s $200 million pricetag, and negotiations are stalled.

And while TF1 and Canal Plus will likely again share the World Cup in France, at what price? France is the reigning World and European soccer champion, so public interest in the sport has never been higher.

Outside of Europe, the World Cup rights to 2002 and 2006 are held by Swiss sports merchandising group ISL, also for $500 million and $600 million.

ISL seems less mercenary in its dealmaking, perhaps because it is counting on ancillary revenue streams. In 1998, Brazilian media group Globo agreed to pay an estimated $50 million for 2002 and the same again for 2006.

Cash-strapped Kirch is refusing to sell its 2006 World Cup rights in advance to maximize the value of the rights, and attitudes toward pay TV may have changed in five years’ time.

Then, the World Cup will be played in Germany — and within the tournament’s most lucrative time zone.

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