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hong kong tv bids for piece of england

Hong Kong TV bids for piece of England
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Hong Kong TV bids for piece of England

Commentary: Operators in high-stake race for English Premier League rights

HONG KONG (MarketWatch) -- Next week, we should hear news on the winning bids for the all-important English Premier League (EPL) broadcast rights in Hong Kong, with the China winner to follow shortly after.

The pull of English soccer among local fans and across much of Asia has made EPL a "must-have" or "killer content" for pay-TV operators. Typically, the winner also takes the lion's share of the market, as fans switch providers to tune into their favorite team.

Few doubt the game's huge popularity across Asia has put an extra zero on the pay packets of players in England. Interest this time on the bidding comes amid renewed pressure to regulate how sports rights are sold, so fans get a fair deal.

Last time around, Hong Kong's PCCW /quotes/comstock/22h!e:8 (HK:8 1.96, -0.01, -0.51%) /quotes/comstock/11i!pcwlf (PCWLF 0.24, 0.00, 0.00%) reportedly paid about $200 million so its new IPTV operation could wrestle the rights away from cable operator iCable /quotes/comstock/22h!e:1097 (HK:1097 0.99, +0.02, +2.06%) /quotes/comstock/11i!icabf (ICABF 0.13, -0.01, -3.99%) for three years. The win was somewhat bittersweet, however, as while it may have propelled PCCW's NOW to be the largest pay-TV operator, it is questionable if they made any money from selling EPL.

PCCW's faltering share price performance since then hardly represents a vote of confidence. Still, it at least avoided the kind of trouble Setanta in the U.K. got into, after ending up in administration after overpaying for EPL rights.

Meanwhile, iCable did not find the loss of EPL the devastating blow many expected -- it is still around and in reasonable health. In fact this year it won arguably the second most valuable soccer rights from NOW, the European Champions League, to keep soccer fans tuning in.

So shareholders as well as fans will be watching to see who wins the soccer and at what cost. There may now be less need to go in with an aggressive bid, with the market arguably approaching a more comfortable Hong Kong-style duopoly.

The only people not happy with this state of affairs are the fans. Worse than having to switch operators each time EPL rights change hands, they now have to buy two cable subscriptions to see the same sport as last season.

In the U.S., where Fox Sports International won EPL rights, they have in past licensed some of these rights out to the likes of ESPN. This has not happened in Hong Kong where exclusive sports content drives the market. (Fox Sports is owned by News Corp., which also owns MarketWatch.)

Singapore also grappled with this problem when SingTel /quotes/comstock/22i!e:z74 (SG:Z74 2.95, +0.02, +0.68%) /quotes/comstock/11i!sngnf (SNGNF 2.08, -0.06, -2.80%) recently somewhat unexpectedly won the EPL rights for its new IPTV service, taking them off the long-standing incumbent Starhub /quotes/comstock/22i!e:cc3 (SG:CC3 2.04, -0.01, -0.49%) /quotes/comstock/11i!srhb.f (SRHB.F 0.00, 0.00, 0.00%) . There was talk of doing a deal to share content amid speculation SingTel overpaid, although this came to nothing. Tens of thousands of fans are expected to switch provider to keep watching English soccer.

Regulators are starting to take notice of the current bidding wars, where the power of rights holders ends up unfairly depriving fans. This may mean more sports events go back exclusively onto terrestrial channels. In Australia, for example 1,300 sports events are preserved for free-to-air terrestrial channels, for which the pay-TV operator Foxtel is forbidden to bid.

In the U.K., the broadcasting regulator Ofcom has put out a paper suggesting joint bidding and mandated wholesale distribution of rights, as well as adding some flagship events back to the list reserved for terrestrial channels.

There has also been some speculation a sharing deal might be done in Hong Kong. It seems unfair that viewers sign up for two year packages, not knowing if their favorite content will remain. Such a move would be positive for viewers, while the pay-TV operators will at least be happy if this takes some of the steam out of ever-rising rights fees.

One benefit of such a change would be that competition could focus on service and added value such as high-definition content and infrastructure, rather than just on who held the current monopoly on must-have sports. In Hong Kong, for instance, iCable underinvested in its network and other services for years, knowing its viewers come to watch EPL.

Over in mainland China, EPL is also popular but, despite the vast potential audience, the ability to pay is less. Despite little government intervention on regulation, the EPL will find competition for bids limited simply by the lack of a nationwide platform other than state broadcaster CCTV.

Last time around, a winning $60 million bid for Chinese soccer rights from WinTV took football off free-to-air. But they struggled to get any sizeable distribution, with pay TV still in its infancy in China and piracy a perennial problem.

This time, the EPL is reportedly planning to go for audience rather than the highest bid, so it can keep its brand recognized among the Chinese fan base on terrestrial TV. This way, revenue can at least come from merchandising or touring for the big-name teams.

There, Chinese soccer fans can look forward to next season. Hong Kong fans better just hope they don't end up the loser in the rights battle
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