Simon English: Is Sky going to be blown out of the water when internet big boys get into football?

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FLASH forward to 2025 as the latest round of bidding for Premier League football rights draws to a tense close.

Sky and BT clung on last time, signing a £10 billion deal in 2020 that just about fended off a huge level of interest from Amazon, Apple, Alibaba and YouTube.

This time, they get blown out of the water.

Amazon, in particular, bids an extraordinary amount for matches and chucks in another £1 billion to launch a TV show fronted by Gary Neville, Gary Barlow, what’s left of Gary Lineker and the ghost of Des Lynam (working title: Top Goals).

Rupert Murdoch, still going as Sky executive chairman at 95 (he cut an earlier deal to ensure he won’t ever die) is livid. How did it come to this?

Murdoch would have right to be annoyed, since he can claim to have been the first to spot how important, how lucrative, football would become.

When he bid £625 million for Manchester United back in 1998, many thought the old man had lost it, that this was an absurd amount for a football club in the North that didn’t even always win.

He didn’t get the deal, but £625 million is now what you have to pay just to sponsor Man U’s shirts.

Since then, Sky has gone from strength to strength, largely on the back of an extraordinary football boom.

Players got rich, but so did investors — which is why Murdoch is looking to safeguard his investment by grabbing the rest of Sky he doesn’t already control.

The rationale for Fox to buy Sky must partly be to give the latter scale so that it can fend off the growing threat from internet giants which want content. Most of the commentary around the £18.5 billion, 1075p-a-share offer has it that Fox is trying to get Sky on  the cheap.

But given the risk to its future from new players with pockets deeper  than the devil, there must be a chance that Fox is in danger of grievously overpaying. 

For an outfit like Amazon, which has an extraordinary amount of information on what its customers like to buy and how much they are willing to pay, a football deal could be a massive driver of sales.

Tom Thirlwall of Copa90, the digital football media brand, tells me: “Amazon would have a huge amount to gain from football. It’s not just a broadcasting rights deal for them, it’s a massive retail play. Broadcasters are going to come under increasing attack from giant tech platforms and new start-ups.”

And indeed, from piracy. At the moment, Sky pays £11 million for every Premier game. It’s hard to see how it can justify paying much more than that, especially given how easy it is getting to watch a game illegally either in a pub or on a mobile phone (I’m told).

When Sky negotiated its present football deal, which runs for three seasons until 2019, tech players got involved in the process just so they could understand how it works, I hear. 

They either didn’t bid at all, or they put in low-ball offers they knew would fail just so they could be flies on the wall. Expect that next time, or the time after that, they will make serious moves which Sky may find it hard to match.

And assume the technology will outpace the race for content, something newspapers have already found with Facebook and Google.

Under this scenario, Sky becomes a victim of its own success.

It has been preaching for some time that football content is the gift that keeps on giving, that the audience is “sticky” in media jargon. If every global media business catches up with this thought and decides it must have Premier League football, Sky — even under the wing of Fox — is in danger of being relegated.

The Sky football deal is already a stretch for many consumers. A 50-year-old will pay £80 a month for some so-so internet coverage and TV that includes sport and films. Today’s 25-year-old is not. That consumer is used to paying £1 or £3 a time for an app they like from, say, Apple.

The computer maker sells so much kit it could, were it minded, buy football rights for nearly ever and stick it on a phone on pay-per-view at 50p a match.

So the conundrum for Sky is that football rights are going to be sold for ever greater amounts, yet cost less to watch. For fans, that’s a result. For Sky, it is hard to see it as anything but a threat.

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December 21, 2016 |
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