The world has changed, Dali

June 20th, 2007

When Rupert Murdoch bought England’s Premier League in 1992 for what was believed then to be an outrageously high price, he breathed life into two major industries.

His BSkyB pay-TV operation, which had been losing money hand over fist, suddenly had the Match of the Day to attract subscribers, and within months became a cash cow.

Secondly, English football received an injection of funds which changed the game, turning talented players into mega-wealthy superstars and successful clubs into billion-pound operations.

Murdoch was the visionary who saw the link between television and sport, and how they fed off each other. Sport could draw audiences to television like nothing else, and television could inject untold millions into sport. Both thrived, as did Murdoch. He told his shareholders that he would continue to use sport as a “battering ram� to build his television interests.

Murdoch did much the same for the launch of his Fox TV network in the US which was struggling against the established networks until he bought American football rights, again for outrageous amounts of money. It enabled him to achieve what all the pundits said would not be possible: the creation of a fourth US television network

You don’t have to like Murdoch to acknowledge that he had the boldness and foresight to change both media and sport irreversibly. The Murdoch experience taught us a few lessons: these rights have enormous value; established broadcasters never quite realize it; when they lose these rights, however, they (like the BBC and CBS) got along fine without them; and the sports thrived on the income.

The South African situation is somewhat different. When MultiChoice offered a reported R1,6-bn to buy the rights to our Premier League, they were not out to beat the SABC. Their concern is the entry of the new pay-TV operators about to be licensed to compete with them. The most notable of these is Telkom Media, probably the only applicant with deep enough pockets to take on the well-established MultiChoice megalith.

Telkom has promised to launch a R100 a month pay-TV subscription (compared to MultiChoice’s nearly R400 a month) aimed at the middle-market. MultiChoice, whose strengths lies in the top end of the market (which is why it already has sewn up most of the cricket and rugby rights), has recently offered a cheaper package, aimed at the middle market. So far, this package has had only limited success, largely because it hasn’t had the content to attract this market segment. Until now.

For Telkom Media, winning the soccer rights would have been a huge boost to their plans, and they bid hard for it. But MultiChoice killed two birds with one big cheque: they blocked their potential competitors and acquired the content to penetrate the rapidly growing middle market.

As happened in Britain, there is an outcry over the prospect that ordinary South Africans who can’t afford subscription television will lose access to the beautiful game. But the likely scenario is more complex.

MultiChoice is obliged under the terms of the deal to ensure that 151 games are shown on free-to-air TV. You can be sure they will want to duck the political flak by making the big games, like finals and derbies, part of this deal. I expect they will be happy to sell these rights to the SABC, as long as they keep out other satellite players.

SABC could therefore get rights to more games than they showed last year (only about 80).

But if the SABC continues to have a tantrum, and refuses again to even put in a bid, then I expect eTV will be happy to pay for these rights.

SABC may be able to delay matters with legal action, but in the end they will have to pay up or concede defeat. If they don’t make a bid for secondary rights, they will just help eTV get them cheap.

For the first time, there is starting to be a really competitive market in television. Suddenly, we are seeing a real value being put on content and talent. The SABC has been able until now to dictate terms to those who sold them any material, whether it was sport, drama or education. Now they will either have to recognize and pay for that value, or they will continue to lose out to more agile and aggressive competitors.

You can be certain that, as in Murdoch’s England, neither television nor sport will be the same again. We can debate whether this is good or bad, but in a market economy, it is as inevitable as a full stadium when Chiefs play Pirates.

*This column first appeared in Business Day, June 19 2007

Entry Filed under: Anton Harber, Journalism, Media regulation, TV