Billionaires Vincent Bollore and Patrick Drahi are squaring off in a battle for sports supremacy in France. It's the latest round in an escalating fight over European soccer rights between traditional pay-TV providers and telecoms companies. And it's one the pay-TV tycoons Bollore and Rupert Murdoch can't afford to lose.
Canal Plus, the French pay-TV group owned by Bollore's Vivendi, scored big on Thursday when it announced an exclusive five-year distribution deal with Al Jazeera's BeIN Sports channel, owner of rights for Champions League soccer in France and for much of its domestic league.
It's far from certain to get past antitrust concerns, but if it does it will allow Vivendi back into a sports broadcasting game that's been dominated by Qatari-owned BeIN over the past four years, at considerable cost to the Canal Plus bottom line:
If it goes ahead, it would also dent Drahi's ambitions to become a force in sports TV. Numericable-SFR, the French telecoms operator owned by Drahi's Altice, beat Canal Plus recently in an auction for the local rights to English Premier League soccer, pushing up the price of the package by 60 percent.
That huge inflationary pressure is being felt across Europe as telecoms companies compete with incumbent pay-TV providers for content that helps sell broadband and mobile services. Murdoch's Sky paid a whopping 70 percent increase -- taking its price to 4.2 billion pounds ($6 billion) -- to keep the lion's share of English Premier League rights for 2016-2019 out of BT's clutches. The impact of that extra expense won't be seen until later this year.
Even terminally conservative Vodafone CEO Vittorio Colao might bid for rights to Germany's Bundesliga games, despite warning that the spiraling cost of televised games threatens to be a "drag for the whole industry." Vodafone's German interest is more bad news for Murdoch, who'll be forced to pay up again to keep hold of the rights.
So far, Britain's BT and Spain's Telefonica have moved deepest into pay-TV's football territory. BT spent about 1 billion pounds ($1.4 billion) on a smaller package of English Premier League rights, and has nabbed the English Champions League package from Murdoch. But its sports foray appears to be paying off, returning its consumer business to growth. After launching its sports channels in May 2013, revenue at the consumer unit rose 11 percent in two years and Ebitda rose 13 percent.
In Spain, Telefonica was bolder: it bought satellite pay-TV company Digital+ last year for 706 million euros. The telecoms leader became the pay-TV incumbent, forcing rivals Vodafone and Orange to get in to the sports rights game too.
Germany is the next battleground. Sky paid 2.5 billion euros last time around and expects competing bids from telecoms rivals in a spring auction. Bloomberg Intelligence analyst Erhan Gurses says Vodafone and Deutsche Telekom will be cautious "since they don’t have the same scale to monetize the rights and don't want to take on Sky directly," though similar could have been said of BT in the U.K. and that didn't keep the price down.
The stakes are equally high in France so Drahi won't let Bollore's BeIN deal go unchallenged. Altice plans to contest the Vivendi agreement on competition grounds, and will probably be joined by France's biggest telecoms company Orange. As the damage done to Canal Plus over the past four years shows so starkly, the fight for these rights is one worth having.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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