Dealing with Covid-19: Why sports shutdown could mean rights windfall

Tim Westcott, research director of channels & programming at TBI sibling Omdia, casts his eye over the immediate and long-term impact that sports cancellations could have on media companies worldwide, including the impact on streamers and the potential of windfall payments as rights’ refunds filter through.

As governments around the world bring in measures to contain the spread of the Covid-19 pandemic, restrictions of mass gatherings of spectators have forced the cancellation or postponement of a series of major sporting events. With players and staff succumbing to the virus, plans to play matches behind closed doors have also been scrapped over the last week.

The disruption to the sporting calendar is likely to last well beyond the point when the pandemic is brought under control, with broadcasters and rights holders suffering a loss of content in the short term as well as potential loss of revenues from advertising and subscription.

The table below summarises the major events impacted, ranging from the NBA and European football leagues, which were approaching the end of their seasons, to other leagues which are likely to see a delayed start, like the MLB, Indian Premier League and Formula One motor racing.

The summer Olympic Games in Tokyo, one of the showpiece events of the year, is due to start in July but the IOC has reaffirmed that the event will go ahead as planned. Germany’s DFL, which is preparing the tender for media rights to the Bundesliga from 2021/22, has also said that the process will go ahead as planned.

Impact on media rights holders

Sport is mostly viewed live, so the indefinite shutdown of major events poses an obvious scheduling problem for channels usually covering live events. In the absence of live content, sports networks are airing repeat programming, minor sports if they are still been played, and rolling coverage of the sports angle of the pandemic.

However, ratings will clearly suffer severely, contrary to the likely surge in viewing with more people self-isolated at home. In the UK, Sky has announced that its subscribers will be able to suspend payments for its 11 sports channels – which essentially means they will not be penalised for cancelling subscriptions to sports packages while still in contract.

Sky in Italy is offering its entire service free to subscribers until 3 April – effectively compensating subscribers to sports-only packages with channels showing film and TV series and other content. Canal+ in France has gone further by making its premium channels free for one month to 15 April to households equipped with a pay TV set top box.

In these cases, the short-term loss of revenue is likely to be small, as companies can simply substitute other kids of content for sport. More worrying is the increasing likelihood of an economic recession, which will test the theory that subscription services are better able to survive financial crisis than media tethered to the advertising cycle.

For sports specialists services like DAZN, the crisis is ill-timed as it was poised to increase coverage from its present nine countries to 200 in May. DAZN says the launch will go ahead, though the timing is under review. The company said that subscribers already have the ability to pause their accounts for up to four months.

Whether media companies will be able to claw back any of the often substantial payments they have made for leagues which are not being played is doubtful, as in most cases events are expected simply to be played at a later date. Outright cancellation would mean that leagues would have to repay media partners. In the case of the Premier League, reports suggest that Sky and BT could be due refunds of as much as £750m ($866m) if the 2019/20 season is ended early.

However, if events are simply played later in the year, an unusually crowded sporting calendar will have a negative effect on some events, which may find themselves shunted aside by bigger ticket sports.

Tim Westcott, research director of channels & programming at TBI sibling Omdia, which combines Informa Tech’s market leading analyst houses, Ovum, Heavy Reading, Tractica and IHS Markit.