New players shake up the business of sport
The old models based on TV broadcast rights are under threat
● As Africa’s pay-TV giant MultiChoice leaves the Naspers nest to list separately on the JSE this week, its decades-long monopoly in sports broadcasting is under threat in the face of changing policy and technology.
And the changes have implications for major sports codes in SA, which rely on the advertising-cum-broadcast business model.
Soccer, rugby and cricket in SA, which make a significant contribution to the economy and provide jobs for players, coaches, support staff and service providers, all depend mainly on sponsorships, ticket sales and the sale of broadcast rights for revenue.
“Cricket SA [CSA] generates its revenue based on the matches we host locally,” CEO Thabang Moroe told Business Times.
He says most of CSA’s income is from sponsorships and broadcasting rights, with gate takings coming a distant third.
Watching sport is a favourite pastime in SA. “We are seeing more young people and African women watching cricket,” Moroe says. “More families come to cricket matches than we’ve seen in any other sport.”
Richard Lord, media and operations director at Meta Media, says live TV is still king when it comes to sports broadcasting. “However, there is a definite trend towards streaming services carrying live sport; payper-view, subscription-based models through apps.”
SA Rugby’s financial statements for 2017 show that of its R1.2bn gross revenue, R670m was derived from broadcast rights and R314m from sponsorships.
The story is the same in football, where broadcast rights earned R600m out of the total of R938m, with sponsors chipping in R306m.
Premier Soccer League (PSL) chair Irvin Khoza says: “The major part of our funding — our lifeblood in fact — comes from agreements we have in place with our broadcasters.”
But the sports bodies might need to rethink this model as online streaming gains ground and challenges to MultiChoice’s domination become more likely.
MultiChoice-owned juggernaut SuperSport currently holds the majority of sports broadcasting rights in the region.
The PSL’s broadcast rights first went to SuperSport in 2007 in a deal valued at more than R1.6bn. The contract was renewed for five years in 2011 and rose in value to more than R2bn. The value of the latest deal has not been disclosed.
At a media conference last month, Khoza criticised the Independent Communications Authority of SA (Icasa) for its proposed amendments to the Sport Broadcasting Services Regulation, which could effectively cancel the PSL’s ability to sell exclusive broadcast rights to the highest bidder or payTV operators such as DStv — greatly reducing the value of those rights.
Khoza said the amendments could lead to the collapse of the league as a going concern. “If these proposed broadcast regulations become law, they will inevitably reduce our income from broadcasting by up to 80%.”
Icasa spokesperson Paseka Maleka said: “The PSL is free to make a formal written submission to Icasa in response to the draft regulations like all other interested stakeholders; and to show Icasa how the regulations are going to affect the organisation.”
The proposed regulations would enable free-to-air stations to broadcast previously exclusive sports events on the grounds that this was in the public interest.
Soccer salaries improved dramatically after the relationship between the PSL and SuperSport began. Players now earn between R45,000 and R70,000 a month on average,
Pay-TV still has a huge role to play as far as sports broadcasting is concerned, specifically in SA. We are not yet at a point where all South Africans have access to data
Thabang Moroe
CEO of Cricket SA
whereas in 2005 players were fighting for a minimum of R10,000.
Broadcasters have traditionally looked to advertisers for their revenues.
Lord says that on a game-by-game basis, when advertisers buy a sponsorship package on free-to-air, it can cost more than it does on pay-TV because of the larger audiences.
However, advertisers spend more on the pay-TV channels overall because they have more content to sponsor on these channels.
Econet-owned Kwesé is in talks with Icasa to secure a commercial free-to-air licence, with plans to offer mostly sport on its broadcast and streaming service. Operating in about 19 markets across Africa, Kwesé, which holds exclusive rights to air US National Basketball Association games in the region, has been fighting to wrestle power from SuperSport as the only streamer of major sports in SA through DStv.
As online streaming becomes more popular, some analysts believe it may be time for sports federations to look outside of pay-TV to distribute and monetise their content.
Moroe says: “I think pay-TV still has a huge role to play as far as sports broadcasting is concerned, specifically in SA.
“We are not yet at a place or point where all South Africans have access to data [or] affordable access. Data is still expensive; smartphones are also expensive for the majority. Based on that, pay-TV still has a big role to play in sports.”
Though Lord agrees pay-TV is king, he points out that in some markets “the likes of Facebook and Amazon are the official broadcasters of the English Premier League and the Uefa Champions League”.
Interestingly, the latest PSL rights auction saw bids from Vodacom — a sign of possible competition by local players outside of traditional broadcasting. As of last month, Vodacom customers have been able to stream English football’s FA Cup matches through the Video Play platform, starting at R35 a game.
Major League Baseball in the US, Manchester United and the National Basketball Association now offer their own streaming and broadcast channels, dealing directly with consumers.
Should sporting teams and leagues be looking to create their own content or broadcast material? Teams and groups such as Orlando Pirates, CSA and Super Rugby have started creating their own online video content, building large followings.
Moroe says: “CSA currently pays for production as far as cricket is concerned, which means we own all cricket content. We have this content archived for ourselves and we have created a YouTube channel to start engaging differently with our audience.”
As for CSA having its own broadcast or streaming platform, he said: “That is possibly something we could do in future but something we’re not ready for immediately. But in the foreseeable future, yes, it’s something we can think about.”