Amazon, DAZN Dash Telefonica’s Hopes for Cut-Price Soccer
(Bloomberg) -- Telefonica SA no longer expects to get a significant price cut on its Spanish soccer broadcast rights after the league decided to sell the matches in small packages to attract more bidders.
Coverage of FC Barcelona, Real Madrid and other LaLiga clubs is a pillar of Telefonica’s TV service. It’s been paying just under 1 billion euros ($1.22 billion) a year for the rights, and an auction for the next three to five seasons is expected in coming weeks.
Until recently, Telefonica executives have signaled they want to be more cautious on the price than in previous bidding rounds. Sport is a major fixed cost for Telefonica in Spain, where sales have been held back by fierce competition.
However, e-commerce giant Amazon.com Inc. and international sports broadcaster DAZN have signaled an interest in joining the auction for the domestic rights, according to a person familiar with the discussions. No final decisions have been made on whether they’ll follow through with concrete bids, the person said.
Telefonica now plans to make a bid that’s competitive enough to ensure it keeps a similar share of the rights it already holds, according to another person who is familiar with the company’s thinking.
Telefonica isn’t ready to drop LaLiga soccer from its TV offering, and may end up bidding a similar amount to last time, said the person, who asked not to be named as the deliberations are private. The company would prefer a three-year contract -- as with previous auctions -- but will accept five years if that is what’s on offer, the person added.
Representatives for Telefonica, Amazon and DAZN declined to comment.
Sports leagues are desperate for more money to offset the financial hit from the pandemic, but recent sales of broadcast rights have been relatively tough. France’s Ligue 1 was forced to reallocate rights at a heavy discount after previous holder Mediapro walked away, and rights values have fallen slightly in Italy and Germany.
The English Premier League managed to roll over its deal with Comcast Corp.’s Sky, BT Group Plc and Amazon for another three years without cutting the price.
The Spanish auction will test the appetite of relative newcomers Amazon and DAZN for some of the game’s prime real estate.
DAZN already unseated Sky Italia as the dominant soccer broadcaster in Italy this season. Chairman Kevin Mayer has signaled he would be keen to broadcast the Premier League -- Europe’s richest soccer competition -- in its home market.
Soccer has helped Telefonica to pivot toward the more profitable premium end of the Spanish market in the past half-decade. Losing LaLiga would be negative for the company, Barclays analysts wrote in a note last week.
There’s a greater risk that its position could be eroded this time around because the league has decided to split the rights. There will be seven packages of games up for auction, starting with the 2022-23 season and ranging from regular weekly games to batches of occasional matches.
Telefonica shows all LaLiga games, and sells some of them on to second-placed rival Orange SA at a price established by the industry regulator.
Orange is open to cooperate with other potential buyers if auction conditions are right, the CEO of its Spanish business Jean-Francois Fallacher said in an interview Tuesday. He said Orange already distributes Amazon Prime Video, and is in talks about re-selling DAZN’s existing content.
The La Liga rights have been too expensive in previous auctions, he said in a speech before the interview. Fallacher declined to comment further on the upcoming rights sale.
©2021 Bloomberg L.P.