How Streamers Like DAZN Are Scoring Sports Broadcasting Rights From Pay TV Operators in Europe

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Cheyne Gately for Variety

The multibillion-dollar market for sports broadcasting rights is wreaking havoc in Europe, where soccer teams are suffering heavy losses due to pandemic-shuttered stadiums as new media players enter the field.

Rapidly abandoned plans by 12 top European teams to form a lucrative breakaway soccer Super League in late April sparked pandemonium among millions of fans, who saw it as an elitist existential threat to the sport itself, prompting U.K. Prime Minister Boris Johnson and French President Emmanuel Macron to step in.

At around the same time in Italy, billionaire Leonard Blavatnik’s live sports streaming service DAZN, with backing from local telco streamer Telecom Italia, plunked down more than $1 billion per season for a three-year contract for the bulk of Italian Serie A soccer rights, displacing Comcast-owned pay TV operator Sky.

A watershed moment for sports broadcasting, the deal marked the first time a streamer has nabbed exclusive rights to a major domestic league in its native territory. Until now, streamers have won some prominent rights, such as Amazon’s Premier League deal in the U.K., but have had to share them with pay TV operators.

The groundbreaking Serie A deal has also turned Italy into a testing ground for the business model behind DAZN, dubbed the “Netflix of Sports,” which operates in 200 markets and is headed by former Disney executive Kevin Mayer, considered the architect of Disney Plus.

DAZN — which pundits believe had a hand in the Super League plan, though the platform denies this — has been busy snapping up sports rights in Europe. It holds a portion of soccer rights packages in Germany, where the DAZN app is carried by Sky, and has a presence in Spain. The service also operates in Italy, where its app is likewise with Sky. But until recently, its plans had been less aggressive. “They were trying not to upset Sky, and to be No. 2,” says François Godard of Enders Analysis.

The gloves are now off, and DAZN in Italy has “completely changed” its approach, Godard notes. Playing hardball with Sky, however, is a gamble, because DAZN still needs the pay TV player as a distribution partner, since delivering live sports to fans on broadband TV remains a challenge.

“It’s tricky because now [DAZN] must find a way to raise funds without using the effective bundling system [that Sky can provide],” says Omdia analyst Maria Rua Aguete.

Amazon, too, has made forays into soccer rights in Europe, where, in addition to its Premier League foothold, it offers some UEFA Champions League games in Germany and Italy. Still, Ampere Analysis’ London-based analyst Guy Bisson doesn’t see this as a trend for the major streamers. High-end premium sports “do not fit with the global streaming model,” he says — they’re simply too expensive.

DAZN, however, as a specialized streamer, is very much
the exception.

Sky, which was hampered in its recent Serie A bid by a regulatory restriction that did not allow it to buy soccer exclusively, is fighting DAZN in court, claiming that under Italian legislation the streamer can’t retain the bulk of those rights. But DAZN is holding its ground.

“There are more OTT pay homes in Italy than traditional pay TV homes, and so the potential reach of DAZN is far greater than any satellite broadcaster,” DAZN co-CEO James Rushton tells Variety. “Traditional pay TV is declining, while we’re growing the OTT pay TV market, so it’s no surprise that we’re witnessing the OTT tipping point.”

Sky declined to comment.

In France, what used to be a hot market for sports rights has been tempered by poor returns for bids that were, in hindsight, far too high.

In recent years, media players including France Telecom’s Orange Sport, pay TV operator BeIN Sports and telecom conglom Altice splurged to buy rights to top local soccer circuits and lost tons of money. Most recently, Madrid-based media company Mediapro’s one billion-dollar deal to acquire Ligue 1 rights collapsed after Mediapro failed to pay two installments, pushing the French soccer league into a serious cash crisis.

Last year, the collapse of a €3 billion ($3.63 billion) TV deal between Ligue 1 and Mediapro, which did not pay up, plunged Ligue soccer into crisis. Ultimately, it was pay TV operator Canal Plus — which for decades had been the main broadcaster of French soccer but was cut out in 2018 in favor of Mediapro — that emerged with the bulk of Ligue 1 broadcast rights for the rest of the season. And all at a fraction of the cost.

Canal Plus chairman Maxime Saada says he won’t threaten the company’s financial footing for soccer rights that have lost significant value due to piracy and the fragmentation of rights.

“There are too many competitions, broadcasters and platforms involved,” Saada tells Variety. “At the end of the day, it inflates the prices for consumers.”

Historically, sports rights have been a way for pay TV groups like Canal Plus and Sky to build their subscriber bases, thanks to high subscription prices that allowed them to shoulder those costs, but the arrival of new streaming services has led payboxes to lower their subscription fees. In this scenario, having soccer isn’t as crucial.

And yet, although Canal Plus is increasingly leaning into films to hook subscribers, sports remains a strong pay TV subscription driver, especially competitions that can spark impulsive subscriptions in a way that movies and TV series can’t.

As for where public broadcasters fit into the competitive landscape, last year’s French Open tennis tournament at Roland Garros, for example, scored an average audience of 3 million to 4 million viewers per day, with rights split between pubcaster France Télévisions and Discovery-owned premium network Eurosport.

But since then, in yet another sign of the times, Amazon has stepped in, ousting Eurosport from Roland Garros after 27 years. This year, France Télévisions will share French Open rights with Amazon Prime Video after Roland Garros organizers, to boost revenues, introduced evening matches that will air exclusively on Amazon.

Ultimately, sports teams must innovate to evolve, says France Télévisions sports chief Laurent-Éric Le Lay, but balancing quality and quantity is essential. “Soccer clubs have created a lot of events that are now competing with each other for eyeballs — and audiences are losing interest.”