Mike Darcey’s Post

Tellynomics 12: Virgin Media and the messy unbundling of sports Fun and games in recent weeks with the pricing and packaging of sport on the VM platform, especially related to TNT Sports. The parties are in "hot dispute", subscribers are up in arms, and it's tricky to work out who threw the first punch and why. But this was a change that has been coming for a long time, and reflects a further chapter in the saga of the unbundling of the bundle. I suspect it also reflects a shift in industry allegiances. As I say, the exact explanation is hard to unpick. I have had a go here, but if someone has better insight or intel, I would love to hear it.

𝗧𝗲𝗹𝗹𝘆𝗻𝗼𝗺𝗶𝗰𝘀 𝟭𝟭: 𝗗𝗧𝗖 𝗗𝗲𝗹𝘂𝘀𝗶𝗼𝗻 (𝗼𝗿 𝗛𝗲𝗹𝗹 𝗛𝗮𝘁𝗵 𝗻𝗼 𝗙𝘂𝗿𝘆 𝗣𝗮𝗿𝘁 𝗜𝗜) I wrote recently about the crisis in Ligue 1 in France. Having humiliated Canal+, its long-term partner, the LFP is in a bind. Its €1bn revenue target is abandoned and it still has no broadcast partner for the season starting in August. Vague threats about launching a DTC service are now more concrete. Reports this week say the LFP is targeting 2m subscribers and €578m revenue per season for a Ligue 1 DTC service. Worryingly naive, as some illustrative numbers suggest. The service would offer all 306 matches, priced between €25 and €30. I note that Now TV in the UK offers Sky Sports – 12 channels, far more comprehensive – for £26 per month (with a 6m commitment), so even €25 is optimistic. But let's give them the benefit of the doubt and go with €25. If 2m subscribers paid €25 pm for 12 months that would indeed bring €600m pa. So far so good, but it’s all downhill from here. More likely, subscribers will pay for the 9 month football season, so we're down to €450m. Part of the price of leaving the bundle. Then, as the US streamers have discovered to their chagrin, there are costs. The LFP plans distribution on IPTV, but platforms will demand a retail margin for access to their base. Assume 20%, a bargain compared to Apple's 30%, so that's €90m gone. Production costs of €100k per match are a further €30m and then there are customer management costs. Assume €1.00 per customer per month, for nine months, and that’s €18m. Nevertheless, there will be churn. Let’s be generous again and assume 2% per month, top performance for a DTC service with many others closer to 5%. That's 40k customers per month to replace, 360k per season, to stand still. At an acquisition cost of €50 per customer, that's €18m. Throw in €2m per month for brand, tune-in and other marketing, that's a further €18m per season. Now the original €600m revenue has dwindled to €275m pa of contribution, at steady state, available for distribution to the clubs. This is the essence of the confusion. When you license content, almost all revenue is available for distribution, so sports bodies tend to focus on revenue. But with DTC, the costs that were borne by others, that you took for granted, are now yours. True, I have not accounted for ad revenue, but nor have I included anything for headcount, shoulder programming, other content to fill out a linear stream, etc. Nor have I factored in the acquisition cost of the first 2m customers, or re-acquiring a good portion of them after each summer break. So €275m contribution pa might be optimistic. It would be fun to watch them try and the rest of the world – leagues and licensees – would learn a great deal. But it would be a disaster for football in France and the ability to attract players. Surely better to swallow Gallic pride and agree a broadcast deal. Unless, of course, even €275m pa is better than what is on the table?

𝗧𝗲𝗹𝗹𝘆𝗻𝗼𝗺𝗶𝗰𝘀 #𝟭𝟬: 𝗧𝗵𝗲 𝗘𝘂𝗿𝗼𝟮𝟰 𝗲𝗱𝗶𝘁𝗶𝗼𝗻 Strong viewing figures for England’s Euro opener vs Serbia on Sunday, with headlines proclaiming an audience of 15m. This was the BBC1 peak, with an average of 10m. How does this compare with days of yore? The 2004 Euros offers a solid comparator. England’s opener was on a Sunday, mid-June, at peak time, against France (admittedly more attractive opposition). The headline then was also for an audience of 15m, but this was the average. The peak was 19.5m. That’s a one-third reduction in average audience over 20 years, or a 25% reduction in peak. A strong performance then, and less decline than we see for other TV genres. As a benchmark, consider the soaps, more robust than most. East Enders averaged 11.3m viewers in 2004 and 3.7m in 2022 (a two-thirds fall). A reminder of why sport is so important in the modern TV ecosystem – in an ocean of content options, sport is the most distinctive content around. That said, some claimed there has been no decline in sporting audiences and that’s not right. Perhaps they were unwittingly comparing peaks and averages and I sympathise. With big audiences harder to come by, our headline writers are more inclined today to quote the peak rather than the average. Meanwhile, some confusion about why there is no ultra high definition (4K) coverage. This is what you should expect when a sporting event is largely confined to free broadcasters, curtesy of listed events regimes. The free model has no means to monetise superior experience – advertisers don’t pay more for the slots – so 4K just looks like extra cost. I suspect a broad Euro agreement not to bother. It was ever thus. The pay model has driven most TV innovation, because it embodies the economics to monetise new features. The pay model ushered in multichannel, PVRs and HD, because the mechanics were there to monetise. In the case of HD, Sky drove the feature in the UK, with the terrestrials reluctant laggards, because it was more cost for no return. HD and PVRs were initially funded by a surcharge, which duly faded as the feature became standard. And so with 4K: only pay TV has the economics to monetise the superior experience. That’s why most football in the UK is in 4K – EPL, EFL and SPL – alongside other tier one pay sports like F1. But not much 4K on the ad-funded terrestrials. Interesting that the Champions League final – still free in many European markets – was originated in 1080p, but “upscaled to 4K” for TNT Sports (pay) in the UK. Also interesting, Wimbledon will be available in 4K. But that fits because, in the end, the BBC is a pay broadcaster – it’s not ad funded and benefits from the enhanced viewing experience (happy viewers more willing to pay the licence fee). And Wimbledon is widely distributed around the world, often on pay services, which further drives demand for a 4K version. But for the Euros, on free PSBs, with modest interest beyond Europe? Cost control wins.

𝗣𝗟 𝗶𝗻 𝘁𝗵𝗲 𝗨𝗦, 𝗧𝘆𝗿𝗮𝗻𝗻𝘆 𝗼𝗳 𝘁𝗵𝗲 𝗠𝗮𝗷𝗼𝗿𝗶𝘁𝘆 𝗮𝗻𝗱 𝗡𝗥𝗥 𝗮𝗴𝗮𝗶𝗻 In a story that refuses to die, Liverpool chairman Tom Werner says he is determined to see a PL game played in NYC. Perhaps Werner thinks this would be only fair, given the NFL and MLB play regular season games in the UK. But they need to do this, because after decades of insularity they have belatedly spotted a big wide world out there, from which they make little money. They need to grow their international fan base if they are to enjoy further revenue growth. By contrast, the PL, focused on this issue for years, has been wildly successful in driving a global fan base, including in the US, recently renewing with NBC for $450m pa. There is, today, simply no problem for the PL to solve, no compelling reason to incur the wrath of domestic fans. If games in NYC is the answer, what was the question? It might, however, be an idea for one of the weaker European leagues, who increasingly trail the Premier League in aggregate revenue and who have not cracked the US market. With work to do to grow popularity in the US, perhaps regular season games in the US would help. Granted, if they did this, and if it was successful, then perhaps the PL would eventually be prompted to follow suit. But that's a long time in the future. Meanwhile, I'm enjoying the T20 cricket World Cup on Sky Sports, an amuse bouche for the Euros. But when I go to my Sky Sports mobile app to check the group tables, key info is missing, again. Sky tells me how many points each team has accumulated but does not show the net run rate, which will often be the decisive factor in which team progresses, with England and Scotland as a case in point. I grumbled about this during the last cricket World Cup and remain perplexed why Sky chooses to degrade its mobile presence. Oh well, all the detail I need is in my newspaper, or on the BBC Sport app. Finally, is there any more to say about the tone-deaf comments from Manchester City about the “tyranny of the majority” when complaining about PL attempts to protect competitive balance? I don't think this is quite what John Stuart Mill had in mind when he wrote On Liberty. My first reaction is this might be a sign of weakness. If they fear an adverse result in the coming arbitration on the 115 counts, launching a pre-emptive attack on the legality of the underlying rules might seem a good hedge? The other message for me is there is no limit to the capacity for wealthy clubs to convince themselves that the current system – that requires them to subsidise the bottom half of the league – unfairly prevents them from realising their full potential. And that fans might resist change in the short term, but they will come around in the end. With this attitude, anyone who thinks the European Super League idea is dead should think again. The mentality that drove this project is alive and well. It is only a matter of time before we see it return.

With my British Gymnastics Chair hat on, excited to be announcing the team for Paris. See you all there.

𝗜 𝗻𝗲𝗲𝗱 𝗮 𝗿𝗲𝗽𝗹𝗮𝗰𝗲𝗺𝗲𝗻𝘁 𝗳𝗼𝗿 𝗺𝘆 𝗹𝗶𝘀𝘁! (A version of this post appeared in Broadcast last week) So much television choice, yet I am watching less, mainly because I can’t remember what I was supposed to be watching. Even when I can remember the “what”, I can’t remember the “where” and the “when” (if relevant): which channel, which night, which streamer? It did not used to be so hard. Four channels were easy to track. Choice expanded in the multichannel era, but the terrestrials were all in the Sky grid, so you could see the full suite of options and make a choice. Sky+ and time-shifting arrived to expand choice further. But I had a system; my regular shows were on series link, then I read the weekend papers (remember them?), noted the TV picks, and set up the key new shows to record. I might watch live, but often I would go straight to recordings and there would be the list of all the shows I was watching, the next episode ready to go. Catch-up arrived to help me recover when I missed something others were talking about and so there was no FOMO, I was confident I was seeing all I wanted or needed to be seeing. Now it’s fallen apart. I still use Sky Q box to manage broadcast TV, but half the picks in the weekend papers are on streaming, and I can’t drop them into my recordings list. All the streamers are on my Sky Q box, but by the time I go in and out of all the apps (if I can find the passwords) to remind myself what else I might be missing and work out the best choice, there is barely any time left in the evening. I try to make notes on my phone, and on scraps of paper, which I invariably lose, and it’s not working. Each streamer offers a partial solution, with shows to “continue watching”, and new shows recommended, alongside some form of “my list” or “watchlist”. But this is only local, internal to each app, based on an implicit conceit that this is the only app I am paying for, the only place I am looking for shows to watch. Back in the real world, I need a solution to operate across my linear recordings plus all the apps, a unified list. But that requires a third party – Sky or an app or a website – to be able to reach inside each streaming app, extract data and drop it into a consolidated list. Apart from the technical challenges, commercial interests stand in the way. The streamers are not co-operating, worried they might lose out in any combined list, preferring the fantasy that I will enter their walled garden and stay there. I am left with drastic measures. I need to scale back to a single streaming app, subscribing for a month at a time, watching everything I want to watch before moving on to the next. That’s not what the streamers want, but they leave me no choice, and it’s probably good for my bank account too. The good news for the broadcasters is that I will always have my Sky Q recordings as my base, as long as they put their best shows on linear broadcast and don’t keep them streaming exclusive.

𝗛𝗲𝗹𝗹 𝗵𝗮𝘁𝗵 𝗻𝗼 𝗳𝘂𝗿𝘆 ... For many sports bodies, the day will come when they consider ditching their long-term broadcast partner. Yes, they have been loyal and true, but better options have emerged and it might now be time to move on. But take care, because sports broadcasters are sensitive souls and known to bear grudges, for years or decades. A few brief words last week from Canal Plus, in the context of a domestic rugby renewal, reinforce the sense that all is not well with the business of French football. Canal Plus is luxuriating in its revenge for past slights, with potential long-term consequences. But this story is not entirely about emotional reactions; there are plenty of rational reasons why a spurned broadcaster might never return. And it is not a uniquely French affair, with plenty of parallel experience in the UK, also involving rugby and football. The lesson is that sports bodies thinking about ditching their long-term broadcast partner should pause before they take the plunge. If certain emotional triggers or practical issues are in play, they might want to make sure they are very confident they will never, ever, need the support of that broadcast partner again.

𝗦𝗼 𝗺𝘂𝗰𝗵 𝗳𝗼𝗿 𝗦𝗸𝘆 𝗡𝗲𝘄𝘀 𝗮𝘀 𝗮 𝗰𝗲𝗻𝘁𝗿𝗮𝗹 𝗽𝗶𝗹𝗹𝗮𝗿 𝗼𝗳 𝗼𝘂𝗿 𝗱𝗲𝗺𝗼𝗰𝗿𝗮𝗰𝘆, 𝗻𝗼𝘄 𝗻𝗼𝘁 𝘄𝗼𝗿𝘁𝗵𝘆 𝗼𝗳 𝗮 𝗧𝗩 𝗲𝗹𝗲𝗰𝘁𝗶𝗼𝗻 𝗱𝗲𝗯𝗮𝘁𝗲 The election has been announced and the TV debates are set, the first on ITV next week, with one on the BBC to follow. It seems, however, that there will be only two, and Sky News does not make the cut. This is a sad drop in status for Sky News which, in 2010, was in the vanguard of campaigning for the televised events that are now an expected feature of our election landscape. In 2010, Adam Boulton for Sky News hosted one of three debates and in 2015 and 2017, Jeremy Paxman was the Sky News anchor, interviewing candidates for Prime Minister and taking audience questions. Roll forward to 2024 and Sky News does not even make the starting sheet. This is extraordinary. In 2010/11, when News Corporation sought to buy the remainer of BSkyB that it did not own, the political and regulatory classes went into a lather about the fate of Sky News. It seemed the world would end, or at least our democracy might collapse, if Sky News was not preserved as an independent news entity. Complex undertakings were prepared to detach Sky News and to preserve its economic position through a long-term carriage deal (the only such deal I have worked on in which I was representing both sides). In the end it was all thrown in the bin when the deal was abandoned in the wake of the Milly Dowler scandal. But history repeated itself when Disney (via Fox) and Comcast battled for ownership of Sky in 2017/18. The fate of Sky News was again the focus of regulatory attention and, once more, it seemed that democracy in the UK would be imperilled if Sky News were owned by people who might not preserve the Sky News role upon which we had come to rely. As victors in the biding war, Comcast agreed a 10-year commitment to maintain and fund (handsomely) Sky News. And yet, half-way through that commitment, Sky News no longer warrants an election debate. Where are the howls of protest? Where are the cries of dismay from those who, in 2010/11, made earnest submissions about the danger if Sky News lost its independence: BT (who knew they fretted about democracy in the BT boardroom?); Virgin Media; Trinity Mirror; even the TUC? Has something gone wrong, has Sky News lost its way, fallen from grace? One website summarised the situation thus: “alternative television broadcasters may miss out on scheduling more head-to-head debates, with Sky News, Talk TV and GB News unlikely to secure Starmer and Sunak”. Is this the company that Sky News now keeps? No longer close to an honorary member of the PSB club, relegated to a list of “alternatives”. What saddens me most is the apparent lack of outrage from Sky/Comcast and Sky News itself. Perhaps they are howling behind the scenes because, surely, they will not go quietly? Certainly, the likes of John Ryley, Jeremy Darroch and James Conyers would not have acquiesced meekly.

𝗜𝘀 𝗶𝘁 𝘁𝗶𝗺𝗲 𝘁𝗼 𝗰𝘂𝘁 𝘁𝗵𝗲 𝗣𝗿𝗲𝗺𝗶𝗲𝗿 𝗟𝗲𝗮𝗴𝘂𝗲 𝗳𝗿𝗼𝗺 𝟮𝟬 𝘁𝗼 𝟭𝟴 𝗰𝗹𝘂𝗯𝘀? The PL circus concludes for another year with heartbreak at Arsenal, four in a row for Manchester City and emotional departures from Liverpool. But there were also significant landmarks at the other end of the table. Congratulations to Nottingham Forest for staying up, in 17th place with 32 pts, but setting a dubious record for the fewest points by a surviving team (beating 34 pts for West Ham in 2005). I don’t mean to be unkind to Forest, and I know their 32 pts is 36 pts on the pitch with a 4 pt deduction, but it is noteworthy that 32 pts was enough for survival. The issue is the weakness of the bottom 3 teams. The 3 relegated teams – Luton, Burnley and Sheffield Utd – had all been promoted to the PL at the start of this season. They accumulated 66 pts between them, another dubious record, fully 10 pts worse than the previous worst, 76 pts in both 2019 and 2020. The points accumulated by the 3 relegated teams fluctuates from year to year but is clearly in decline. The average over the last 6 seasons is 77 pts, compared to an average of 92 pts average over the preceding 17 seasons (after which I got bored checking). The 4 lowest tallies have all been in the last 6 years. It is harder and harder for the bottom 3 or 4 teams to compete meaningfully with the top and even the middle PL teams. It seems we are trying to hold too many teams in the PL, so does this suggest revisiting the question, much deferred, of reducing the PL from 20 to 18 teams? With growing unease about fixture congestion and player wellbeing, as more and more demands are placed upon players, removing 4 fixtures per team from the schedules could help. Despite professing to care about player welfare, however, clubs resist pursuing an obvious solution. A change would require 14 clubs to vote in favour and, perversely, more than 6 clubs at a time tend to worry that a reduction of 2 PL places might be curtains for them. A change would also create complications with recently extended broadcast deals. You could get from 20 to 18 clubs in one hop by relegating 4 clubs and promoting only 2 from the Championship. But this means losing the play-offs for the third Championship promotion spot, including the “most valuable game in football”, so Sky would want compensation. And the new PL broadcast deals provide for 270 live TV matches with a pack and picks structure based on 20 teams each playing 38 matches – this would all need to be recast. And the Championship would balloon to 26 clubs, so further changes would need to ripple down through the tiers. It is clearly difficult. But if the clubs won’t grasp the nettle, player welfare will continue to suffer, and the data suggests the bottom 3 or 4 PL clubs will increasingly be little more than pointless (pun not intended) cannon fodder for the top half. Whatever happened to that football regulator?

𝗖𝗮𝗹𝗺 𝗱𝗼𝘄𝗻: 𝘁𝗵𝗶𝘀 𝗶𝘀 𝗻𝗼𝘁 𝘁𝗵𝗲 𝗯𝗶𝗴 𝗡𝗲𝘁𝗳𝗹𝗶𝘅 𝗺𝗼𝘃𝗲 𝗶𝗻𝘁𝗼 𝘀𝗽𝗼𝗿𝘁; 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗙𝗔 𝗖𝘂𝗽 𝗶𝘀 𝗻𝗼𝘁 𝗮𝗹𝗹 𝗯𝗲𝗵𝗶𝗻𝗱 𝘁𝗵𝗲 𝗽𝗮𝘆 𝘄𝗮𝗹𝗹 News this week that Netflix will broadcast two NFL game on Xmas day. Is this the long-awaited Netflix move into sport, allowing all to shout “I told you so”? I think not, yet. Netflix is a subscription business and one day of sport cannot sustain a sports fan with no promise of regular sport to follow. And there is no path from this initiative to a regular NFL offering; those contracts are locked up. Pricing is said to be $150m for two games, a steal compared the going rate of $100m or more (see Peacock and Amazon). Why would Netflix spend at this level if it is not the start of a live sports offering? Better to think of this as marketing spend, to nudge sports fans to sign up for Netflix, hoping, especially over the Xmas period, they find other content they like and remain subscribers. Netflix must think this is efficient marketing spend, better than linear TV ads and discounted new subscriber deals. It probably also suggests subscriber acquisition is getting harder, that existing “routes to market” are saturated. And hints that sports fans, homes still with cable, are the next pond for Netflix to fish for further growth. But NFL is merely the lure, it is for other content to hold them when they sign up. Might we see this sort of trick in the UK, games held back from long-term contracts for one-off auctions? First the question of money. $150m sounds a huge sum, but it’s £120m and, dividing by five for population, is £24m or £12m per game. This is above the average price of a PL game, but plausible for a big game. It would not work today. Most sports bodies here sell rights to all games, so they have nothing to sell. Others, like the PL, selling 200 of 380 games, promise not to sell any further games, so are precluded from springing a surprise like this. What about next time? Perhaps not Xmas day, but could they withhold a game or two around key shopping dates and hold an spot auction between streamers keen for a marketing gimmick. It might be a better way to generate revenue from Amazon, Netflix and Apple. But it’s probably only a trick for the PL (or other major European football leagues) to consider. You don’t want to end up like the RFU, unable to find a broadcaster for an upcoming Japan vs England game. Not a good look. Meanwhile, all is calm once more re the FA Cup, it is not all going behind the paywall as the BBC has secured 14 matches per season. Curious that reports have TNT selling rights to the BBC. In the past, the FA would deal with all broadcasters direct, but here it seems they have sold all rights to TNT and required them to on-sell. So did the FA bank a fixed sum for all rights and leave TNT carrying the risk of what a free auction would bring? If so, brave move by TNT.