Newspapers this week are trying to imagine that they see the hand of Rupert Murdoch in the deal this week for Germany’s only major satellite TV operation Premiere, to take back the Bundesliga soccer rights that it held prior to 2005. Back then it lost the direct rights to Unity Media subsidiary Arena, which in turn leased them back to Premiere creating an uneasy alliance.
Unity Media owns a number of German cable operators and is effectively a direct rival to Premiere. But Premiere is really just a set of pay TV channels, available either via an Astra satellite or on cable. The previous deal meant that Premiere provided the Arena football package to the 9 million cable TV households held by Kabel Deutschland, so customers would have had to subscribe directly to Premiere on cable. While the remaining cable majors of Ish, Iesy and Tele Columbus, all owned by Unity Media, could sell them direct with no involvement with Premiere.
The bloody nose that this gave Premiere was significant, and regardless of who owns what at Premiere (Murdoch’s News Corporation has patiently built a 25% stake) it was bound to be sure that it outbid Unity Media this time around.
The Bundesliga has always been the Premiere cash-cow and initially deals to carry it were set up by the founder of Premiere, Leo Kirch, who has battled against bankruptcy and other media failures and ended up losing control of Premiere to Murdoch, a deal that has opened the door to more Fox and other US content on the pay TV channels.
Premiere will now pay a little over €1 billion ($1.26 billion) for the Bundesliga games for four seasons from 2009, a small increase in the annual payment to the soccer league starting at €255 million in 2009, rising to €275 million in 2012. Meanwhile previous Premiere owner Kirch had tried to offer even more for the vital soccer games, around €500 million a year for ALL rights, but this was barred as anti-competitive by the German finance regulator. This is still more than the Premiere TV rights plus other media and highlights deals put together, but the regulator was unhappy having all of that in one set of hands.
Premiere has just re-stated its subscriber numbers from 4.3 million to 2.5 million since News Corp friendly executives were put in place, a move which crashed its share price and sparked speculation that either News Corp or Mediaset, the Italian broadcaster owned by Italian Prime Minister Silvio Berlusconi, or others, might mount a full bid for the business.
The Premiere soccer deal covers live games, and highlights over cable and satellite and on the internet, while Deutsche Telekom has some broadcast internet rights so that it can show some games over IPTV and also has exclusive mobile phone rights. Other free to air public broadcasters also have some highlights rights. This is the rigid sports oriented formula that Murdoch has assiduously followed since entering the pay TV market in Australia, the UK, Italy, South America, parts of Asia Pacific and the US.
Premiere is still in the midst of renegotiating debt terms with its bankers, but this win is likely to make that job easier, not harder.