BeIN Sports F1 pull out not just Middle East business

In pulling out of bidding to renew Formula 1 rights for the Middle East and North Africa, beIN Sports appears to have caved into piracy. It is the first time a significant rights decision affecting over $100 million in potential payments has been attributed directly to piracy, even though there are other factors involved in this case. The main factor, indeed the chief cause of the piracy, was the cold war that broke out in June 2017 between Qatar, beIN Sports’ home country, and Saudi Arabia.

At that time the Saudis, along with its allies Bahrain, Egypt and the United Arab Emirates, cut all diplomatic and commercial links with Qatar, launching a trade boycott with accusations about supporting terrorism in the region. Qatar denied this, yet the boycott has continued, and it was at that time pirate broadcaster BeoutQ emerged in Saudi Arabia to operate with impunity. In fact, BeoutQ has been able to stream and distribute over the Riyadh-based Arabsat satellite network unmolested by any security, gaining large numbers of viewers in the process who pay $100 each for a subscription. The exact size of BeoutQ’s illegitimate subscriber base is unknown, but beIN claims to have had several million cancellations, mostly among former Saudi Arabian customers.

It was five years ago when beIN Sports triumphantly announced it had seized Formula 1 rights for the Middle East and Africa for the period 2014 to 2019 from the Abu Dhabi Media Group, paying an undisclosed amount we believe was circa $35 million a year. Initially this was successful but as it happens there seemed to be some loss of interest in the region in Formula 1, so that beIN had been losing viewers even before the diplomatic and trade spat between Saudi Arabia and Qatar broke out. But that loss became life threatening after BeoutQ started undercutting beIN by 50%, pirating not just Formula 1 but also other premium sports, including grand slam tennis, and also football with all matches of the FIFA 2018 World Cup being shown.

As events have transpired, it may be that the BeoutQ case ends up aiding the fight against pirates because it has bitten off more than it can chew. To an extent it has become a pawn in the regional conflict between the Saudi Arabian coalition and the rival group involving Iran, to which the blockade has brought Qatar closer. It was really links with Iran rather than alleged terrorism that sparked the blockade in the first place, coupled with some historical rivalries among the region’s royalty.

Given that Qatar, with 14% of the world’s known natural gas reserves, has recruited sport as a strategic weapon to turn cash into global influence having astonishingly won the bid to stage the 2022 World Cup, it was not so surprising that Saudi Arabia has at best turned a blind eye to BeoutQ. But it now looks as if the Saudis have also pushed their luck too far here, rather as they did over the assassination of Jamal Khashoggi, a Saudi dissident and journalist for The Washington Post, at the country’s Istanbul consulate on 2 October 2018. The country never denied this was carried out by its agents, only that its Crown Prince Mohammad Bin Salman issued the orders.

The BeoutQ case has also elicited a backlash, in this case not just from the global pay TV industry but also the World Trade Organization (WTO). Early in the fall of 2018, beIN launched a $1 billion claim against BeoutQ, while the Qatari government petitioned the WTO to investigate Saudi Arabia over allegations of intellectual property violations. WTO in December 2018 confirmed that it was stepping in to follow up those Qatari allegations that Saudi Arabia had not taken effective action against the channel, not having even acknowledged formally it was based in the kingdom.

Around that time other operators and broadcasters around the world picked up the cudgel, with the BBC and Sky among those lobbying the European Commission to act against BeoutQ. This reflected how the piracy was not confined to premium live sports, with the BBC arguing that availability of its content via BeoutQ’s pirate activity would adversely impact licensing of its channels to partners throughout Europe and in turn those partners ability to sell subscriptions to their TV television services. Sky’s complaints were similar.

There has also been lobbying of the US government by NBC Universal among others, while beIN itself has gained a lot of traction from its recently established website setting out all the evidence it can muster about beoutQ, including its backers and details of all commercial rights it has stolen, hardly needing to append the caveat “allegedly”.

FIFA has also weighed in, hiring lawyers in Saudi Arabia to fight beoutQ and lobbying authorities elsewhere to join in. For FIFA this may be welcome relief from the ongoing stench of corruption associated with Qatar winning the bid, but in this case it has most of the footballing world on its side. Saudi Arabia has overplayed its hand, and this may ultimately be bad news for the pirates.