English Premier League: Sky, BT and the Amazon question

Stuart Thomson looks at the implications of this week’s Premier League rights award to Sky and BT, and speculation over Amazon’s intentions. 

Coverage of this week’s Premier League auction results focused on the reduced amount paid by the winners to secure the bulk of rights on offer, and on the absence – so far – of Amazon from the competition.

Sky and BT between them have appear to have paid about half a billion pounds less for the domestic UK rights than in the supercharged 2016-19 round, which saw an unprecedented sum of money land in the league’s lap.

This does not necessarily mean that England’s top-tier footballers will be trading in their Ferraris as they adjust to their reduced circumstances, however. The league can expect a much increased take from international rights this time round, and it still has two packages of domestic rights to sell.

The latter packages, offering multiple matches from the fixture list four times a season to be broadcast simultaneously, seemed tailored to tempt in a web player such as Amazon.

There has been frenzied speculation over the latter’s intentions.

Analysts at Berenberg delivered a split opinion, with its media and telecom teams taking opposing views. The media team took the position that Amazon would be keen to acquire the rights as part of a plan to make their video offering a standalone, fully-fledged proposition, while the telecom team took the view that Amazon would focus on the economic case for bidding, and that the economic case simply couldn’t be made.

UK analyst outfits Ampere and IHS also squared up from opposing ends of the pitch ahead of the results.

Ampere, taking the view that Amazon would likely bid, predicted that the overall value of the rights would top £10 billion for the first time, with both BT and Sky paying more and the value of international rights also increasing dramatically.

Ampere predicted that Sky and BT would “remain strong and viable bidders” and would by unlikely to pull back on spend, and that Amazon could be a bidder both for international and domestic rights.

IHS on the other hand took the view that bidding for domestic rights would be an “unnecessary extravagance” for Amazon and that it was unlikely that either Sky or BT will have to defend an aggressive bid from their rival after the two companies agreed to distribute one another’s channels on their platforms from 2019.

So 1-0 to IHS? The analyst group was quick to note that “competition from the big tech firms for the main season-long packages failed to materialise” when the auction results were revealed. IHS focused on reports that the reserve price for the remaining packages had not been met as a further indication that Amazon has decided not to play.

It’s all over? Perhaps not. The Times yesterday reported that Amazon is among bidders negotiating for the 40 games available in the two remaining packages. According to the paper, the Premier League tender document promises help for any broadcaster acquiring the rights, possibly involving a stream of the feed produced by its own production outfit. However, according to the paper, bids will likely be in the region of £250 million, still leaving the League well short of its domestic haul the last time round.

The League must therefore rely on international rights – including growing interest and money from China, where it has already struck a deal – to come to the rescue, part of the ongoing process of globalisation of content that has seen the likes of Amazon rise to prominence in this business in the first place.

For Amazon, analysts’ uncertainty possibly reflects the company’s own uncertainty about where it wants to go. It has so far taken a series of tentative steps into live sports, and a bid for one of the two remaining Premier League packages would fall short of qualifying as a huge change in its approach. It would involve paying a sensible sum, at least from Amazon’s point of view, that would allow it to test the water a little further out from the shoreline.

For Sky and BT meanwhile, an expensive and possibly unaffordable bidding war has been avoided. BT has stepped back from taking Sky on at the game that made the latter’s business what it is today, and has chosen to remain as be UK’s second-string player.