Published:
19-Jul-07
German pay TV operator Premiere will effectively take over all rights to the country's top football league from cable group Unity after a sub-licensing and wholesale deal was given the nod by Germany's cartel office (the Bundeskartellamt). Pair have been in drawn-out negotiations after the regulator launched an investigation into an earlier sharing agreement thrashed out in February. Terms of the new agreement give Premiere full control of the German Bundesliga rights, although Unity will continue to underwrite the costs. Agreement also includes rights to the Spanish first division and UK Premier leagues which Unity acquired earlier this year. Premiere will take an exclusive sub-license to the rights through to the 2008/2009 season and will market all football content and programming under the Premiere brand. Premiere will pay a license fee to Unity and Unity will still get the 16.7 per cent non-voting stake in Premiere that was included in the earlier deal, to be held through Swiss financial group Pictet & Cie. Cartel office has said Unity must sell the shares by June 2009 when the rights agreement between the two expires. Customers already subscribing directly to Unity's Arena service either through its new satellite platform or through Unity and Kabel BW's cable networks will continue to receive Bundesliga programming (now with Premiere brand), with Unity paying a per-subscriber fee to Premiere. Bundesliga is also available to Deutsche Telekom IPTV subscribers through a separate rights agreement.
Premiere will make the football available through three main packages. Bundesliga games will be available in a stand-alone package for €19.99 a month or for €9.99 to customers taking the complete Premiere digital offer. An additional tier containing the Bundesliga games and all UEFA and other European soccer leagues will cost €29.99 a month. Premiere has also agreed a six-year carriage agreement to distribute its channels on Unity's cable networks, including capacity for its Premiere HD channel.Premiere will continue to carry out subscriber fulfilment and billing for its customers via cable, but crucially, the Premiere content will be offered using Unity's own smart-cards from 2008, rather than over a Premiere set-top box and card as has historically been the case. This should have benefits for the cable group in upselling its own managed digital tiers.
Our take...
Back in December 2005 when Unity first snatched the rights to the Bundesliga away from Premiere, Screen Digest predicted that Premiere would regain full access to this crucial property. We doubted that Unity would be able to cover its costs building a football customer base from a standing start among its tiny digital customer base. This agreement marks an end to the shake-up in Germany's pay TV market with a hugely positive outcome for Premiere. But the long-term benefits of the drama run far wider. Although the rights are now 'back home' with Premiere, the past 18 months of uncertainty have had positive benefits for the cable industry as a whole and for Unity. Unity has built its own-managed digital cable subscriber base at a far faster rate than it would otherwise have done; Unity's digital subscriber base is now almost as big as the much larger KDG. It has also gained an alternative national satellite pay TV platform through its satellite offer built around the football rights and associated digital family pack of channels. Unity's satellite service currently has 350,000 subscribers and will continue to be marketed as a separate platform. It has been one of the first offers to piggy-back successfully on Germany's significant installed base of freesat homes and has gained first-mover advantage over another new satellite platform planned by Astra.
In addition to re-gaining control of the football, Premiere also seems to have benefited financially. It claims that the license fee it is paying Unity for the rights is lower than the amount paid directly to the Bundesliga in the 2005/2006 season. It now expects to regain the 'substantial' number of customers who churned after it lost the football rights. Unity Media also claims to have gained €100m in savings from latest restructuring of the agreement.
Deal also gives insight into the apparently obscure workings of the German cartel office and its close regulation of the media. To all intents and purposes, the outcome of this agreement is identical to the deal struck between Premiere and Unity in February this year. The difference lies in nuances of distribution which seem to go against the regulator's desire to foster competition. The earlier agreement would have seen Premiere marketing the Arena-branded platform and Unity selling all Premiere channels and packages directly to its cable customers via a wholesale agreement. Cartel Office's approval of this latest deal, which will see a direct billing relationship maintained between Premiere and its customers via cable, sounds the death knell for Arena, which will disappear as a content platform and brand. However, Premiere will grant Unity and Kabel BW license to sell the branded Premiere Bundesliga package directly to its customers in return for a wholesale per-subscriber fee. This will be offered alongside Premiere's directly marketed package offered to Unity's cable customers. German cartel offices has a history of blocking media alliances that foster closer content distribution ties. It blocked Liberty Media's ambitions in the German cable market because of its significant content holdings and also scuppering plans by publishing giant Axel Springer to take over commercial TV group ProsiebenSat1 Media.
One last point: with the football season due to start next month, perhaps the biggest winners are Germany's football fans now that uncertainty over accessing the games on TV is ended.
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