UP562 The Bundle: Hydration Economics; Sky's ITV portfolio; Survive to Survive; DAZN, NRL and Bundesliga

0:00Murray Barnett:Hello there, Richard Gillis here. Welcome to Unofficial Partner. Today it's the bundle with Murray Barnett, 26 West and Yannick Ramcke from OneFootball talking about sports media and the streaming marketplace. The subjects today are the commercialisation of the hydration break at the World Cup, how much money has been made, what does it mean and what if it sticks around for a long time, what does it do to the rights market. did the rating success for Fox in the US has it changed US broadcasting's relationship to football more generally what does it mean for people who have rights to sell which is quite a lot of people Sky's 1.6 billion pound ITV takeover is this the return of the full funnel broadcaster that's one of Murray's great phrases and we pop that in is the sports documentary gold rush over some numbers from Ampere suggest it's certainly slowing and we're looking at who's going to survive, what's going to happen as a result of that marketplace contraction.

1:00Murray Barnett:DAZN's massive bet on rugby league in Australia. What does it mean and why have they done it? What does it say about DAZN but also what does it say about rugby league as a sport? And we finish off with Bundesliga selling rights to Versandt in the US at quite a discount. So, and again, we compare that to the international rights success of other properties, including the Premier League. Quite the gap there. That's all in the bundle over the next hour. Hope you enjoy it. This episode of Unofficial Partner is sponsored by our friends at the Institute of Sport Humanities, ISH. ISH educates sports current and future leaders around the world as the leading independent provider of leadership education and insight for the sector.

1:44Murray Barnett:Their Strategic Sport Leadership Masters, the MA, is for industry executives to study alongside their careers, designed for professionals who want to build on their experience, strengthen strategic thinking and connect with a global network of peers working across sport. Applications are now open for the next intake on the 2026 Strategic Sport Leadership MA starting in September. visit sportshumanities.org for more information and there'll be a link in the show notes

2:22Murray Barnett:i've started going around asking people sort of how was it for you there's a whole sort of summing up bit to be done about the world cup there's loads of endless conversations in running into it and talking about you know the pre-period as always is with a big event and we're now at the stage where we're saying okay well what has actually happened and there's a sort of follow-on thread of how much of it is going to hang around for the next one has anything changed fundamentally or is it just about this time in america and they're just you know the rest will resort to business as usual but let's talk about the hydration break because it's been given enormous amounts of time in terms of analysis player welfare measure or advertising product question mark did they work commercially and the big question is whether or not they're going to be sort of priced in to future rights negotiations and that's the bit that we don't quite know and i'd love your views on it but just let's start before we get too specific about what do we think about them and has it now i'm not necessarily talking about the product itself on the field you know there'll be football podcasts talking about that in terms of whether it affects the flow of the game and all that from a commercial point of view murray barnett what did you think what were you thinking beforehand and what's your sort of sense as you've watched the the thing evolve so i think when we recorded the last bundle i i sort of said that i think it was very much a necessity because of some of the temperatures and some of the games that then fifa were maximizing for commercial value and whether you believe that or whether you believe it's the commercials leading the decision what is absolutely clear is it's been a blockbuster success for for fifa and for fox sports in the u.s because if you look at the numbers that have been reported it's somewhere between 300 million and could be as high as 450 million in dollars of commercial gross commercial revenue and when you look at the sorry is that additional on top of what additional additional so if you if you take the conceit it's 104 matches with two breaks each that's 832 additional 30 second spots at roughly 300k dollars a spot it's effectively refinanced the entire english language fee telemundo didn't take it in uh didn't take them in in spanish language and i'm not sure what happened in a bunch of the other international markets we know that itv didn't take it in the uk because of ofcom regulations so they weren't able to commercialize it but you've got to look at the thought that that delta is all of a sudden becoming a material revenue stream for anybody that is going to look at selling rights, let's call it specifically, back into North America and will be priced into that.

5:27Murray Barnett:So there will be a lot of pressure on broadcasters to pay more for football. Although, at least in the anecdotal conversation that I've had with everybody, there seems to be very much a view that we won't see any European football leagues or UEFA events having them any time soon. Janik?

5:48Yannick Ramcke:The question is, okay, what of the many, many revenue creating or generating tactics that the FIFA deployed for that particular tournament is specific to the particular circumstances that we are talking about? And what sticks in terms of it's a precedent set for the future and it's just the way things will be done going forward. And I think in that particular issue or matter, the hydration breaks are here to stay, right? I don't think they have been fully priced into the agreements. Again, with the disclaimer that the Fox Media Rights acquisition for that particular World Cup is a whole different repertoire that we don't want to go into right now.

6:30Yannick Ramcke:But I don't think it has been fully priced in to the valuation. But I also think, as Murray said, it's quite the US-specific, given also the size of the advertising market, the size of CPMs paid in that particular market, given that as you were alluding to in other markets where the free-to-air broadcasters who have the reach to really earn a return on advertising are often publicly funded or they have like from the local media regulator. So I think it's quite specific to the yes. I don't think it has been fully priced into what Fox has been paying, but that has also a side story to it. But it's a tremendous commercial success.

7:14Yannick Ramcke:It's a great narrative heading into the next media rights negotiation. And we already see that the FIFA is full on pushing different buttons to justify also the price expectations that they have for the next cycle. And the hydration breaks will be one thing front and center. In addition to the expansion of the match inventory and many, many other things and how they try to build a narrative around why it might be worth the big next time around.

7:45Murray Barnett:I think also you've got to look at it in the context that lots of other sports are trying similar things and whether that's the super advertiser-friendly sports like, say, an IPL, but even right through to Six Nations and the side-by-side advertising that they've done, is it's not something that's exclusive to FIFA. All sports are looking at different models for how they can better commercialise airtime, whether that's creating new inventory or filming things slightly differently, such as the side-by-sides in Six Nations. So there's definitely going to be an increased level of creativity in more commercialisation into feeds in whatever form that takes.

8:33I thought one of the interesting bits about it was the timing of the announcement that they were going to do it because obviously it came quite late and talking the other day about so Comma Bowl they did it in that event they did it the Club World Cup so

8:48Murray Barnett:the sense of I guess my question is or my thought was this is a good way of sort of explicitly demonstrating the additional value so if they'd have done this in advance and the rights fee the rights negotiations would have taken place then we would have you know it would have been priced in and there would have been a negotiation they wouldn't have seen the sake like so fox wouldn't have seen this enormous jump presumably or they wouldn't have it wouldn't have been so public now we're talking about these jumps and this you know this extra amount of money that has been made by fox that's a heck of a lever for fifa to then go back into the market next time so it's almost like i'm sort of suspicious about how late they announced this to not just the world, but to broadcasters.

9:37Yannick Ramcke:Yeah, but I think that's a bit like retrospectively. I fully see the point that you are making. Do I think that this has been a grand master plan to come with that around the corner, closer to the tournament when all the media rights agreements, except for the very few that we also discussed last time, some last minute deals like in India and so on, where it's not baked into that agreement because it obviously helps as a narrative going forward. But do I think that they had planned this from the get-go as such? I just think it's like over time you identify opportunities and it was more opportunistic rather than strategic.

10:19Yannick Ramcke:But nonetheless, it doesn't change the ultimate outcome. Whether that was thought ahead for multiple cycles or at least three, four years or not. But it fits the overall, I think it fits two overall themes. One is the continuous pursuit at the FIFA to unlock incremental commercial value. And there to the question whether it has been a success or not, I think whether it's the hydration breaks, whether it's the preferred digital platform program, which we discussed, whether it's the betting streaming rights, right? I think you can take all the boxes because I haven't heard much. about the betting streaming rights.

10:59Yannick Ramcke:We discussed before, is it converging into the media product? Is there a zero-sum game? Is it cannibalizing? Is it undermining or diluting the media rights value? There was no discussion whatsoever around this. So these are all precedents that are now carrying over into the next cycle. And I don't think we should expect that FIFA is done with further expanding revenue opportunities. and I think advertising will be front and centre. Football has been inherently disadvantaged given just the continuous flow of the game without the natural breaking points. But whether it's virtual advertising boards that you can sell multiple times across different regions in the world or split screens, side screens, L-frames, I think it's a continuous pursuit that hasn't ended with this edition of the World Cup.

11:51Murray Barnett:well also I think there's a point to be made that and we're going to go on and talk about this a little bit is that the ratings have been much more successful than perhaps Fox or indeed FIFA were expecting in the US and that's obviously translated into into the into increased value from the hydration breaks but so when they were going into it they didn't necessarily appreciate quite how successful it was going to be yeah it's interesting quote in in puck john urind i thought it was interesting the american the view of the the breaks of the well-placed sources tell me that senior fifa officials remain torn a potential obstacle to making hydration breaks permanent the organization continues to field complaints about stoppages particularly from abroad so obviously i.e outside of the u.s i.e the rest of the world who plays football they're really hearing it from the rest of the world this person said or they're just negotiating or both so i think there's a you know i think it's quite an interesting sort of moment and as i say we don't

12:57Yannick Ramcke:quite know what's going to happen yeah i think i'm not saying this is crisis communication but i think also the fifa wants to be on top of the narrative how this is framed and positioned so i acknowledge the thing acknowledging that this is not a straightforward clear-cut thing that is wholly accepted. I think it's only like part of managing the communication. At the same time, I think there is a narrative that you can spin around player welfare, around uptick in scoring, post hydration break, because you may have done strategic or tactical adjustments. So again, I think forget about the process in terms of outcome.

13:39Yannick Ramcke:I think for the World Cup, it will stick around because you have also some low-hanging fruit in terms of local temperature environments coming up with southern europe or even latin america but then again also time zones

13:55Murray Barnett:we haven't discussed there's a just one final point before we move on is the big if is if you are relevant in this and you're looking at champions league rights for the next time around if you see that fox number based on how many games was it you said there 104 games extrapolate that and i'm gonna ask you to do it now but if you said right a champions league deal four years and you insert that inventory into every champions league televised champions league game you start to get to some very very big numbers now we're calling it hydration break now but it's a it's a sort of job of an afternoon for the marketing department to come back and call it something else and come out with a different rationale for it but then you've got this is a lot of money you know this is not just a minor bump this is potentially transformational isn't it I mean UEFA has been one of the most vociferous in coming out against the hydration breaks publicly and so I think it would take a big stretch to think that at any time soon a hydration break type scenario would be included but that doesn't mean that they're not going to look at other ways to look at look at increasing commerciality I mean you know Yannick mentioned it earlier there are tons of ways you can do it side by sides L frames increased you know branding within the feeds etc etc and I think that if you're sitting at relevance offices you would be you know workshopping all of those ideas to take to uefa and say look you know we promised you a big increase well this is going to be one of the ways that we can get to that certainly on the sort of the sponsorship side without sort of damaging the media rights revenue and maybe a semi and a final in america with breaks built in blah blah blah along we go see this is this is like a break it's like a relevant brainstorming session an irrelevant an irrelevant brainstorming session That's the title of the podcast.

15:54Yannick Ramcke:No, I think it will provide a lot of food for thought, a lot of input. Again, I don't think all of these things will stick around, including the uptick in audience, right? Obviously, you can spin a narrative. The matter of fact that the audience increase for Fox has been 120 % with or without the host nations before the elimination, after the elimination. I think obviously it supports, it's not a narrative that there's a sustainable momentum. But I don't think that, well, I do think that the fact that it is taking place in the very market that we are talking about and where they want to realize a greater return going forward, it did make a difference.

16:36Yannick Ramcke:It's just, and if it's local time zones, if it's the local momentum and support and all of this, there is a difference. You can't just copy and pass this growth rate or assume that this new plateau or level of audience in the US will be there in four years' time.

16:53Murray Barnett:Okay, just before we leave the World Cup. So the big question, and I'm not asking this one, is whether or not this is going to land football in America, etc. But the ratings, as you say, have been very good and have sort of outperformed Fox's expectations. That's the running story. And I'm wondering what that means and whether or not it changes things. And again, there'll be a lot of rights holders we mentioned relevant, but Premier League, lots of international leagues are looking at this and saying, OK, well, if this World Cup has created a generation of genuine football fans who are hungry for content, we have plenty of it and we've got rights to sell.

17:34Murray Barnett:So just talk me through this. Do you think this will change? This is a moment in this sort of story of football's relationship to the US. Murray, what do you think? Americans love anything that has world championship or world in the title. And so I think that the fact that it's happening on their shores and therefore in very sort of good or viewer-friendly time zones have all had massive impact on it being successful. When you have Premier League coming in in the morning, albeit the Premier League does very well considering the time slot it's in, as well as multiple football leagues competing against each other during the same time.

18:17Murray Barnett:We've talked about Champions League coming in during the week. I don't think it signals any sort of massive change in the way in which the US feels about soccer. And I mean, I do think that people will be looking at it and saying the next World Cup and UEFA will be saying the next Euros should see big increases in fees. but if you like that's that's more of a market correction thing recognizing the size of it and the level of competition that you have in the u.s rather than anything else because i think there's now a narrative that's developed that the football is a football soccer is a mainstream sport in the u.s now i don't buy that yet but i think that's the narrative that that's out there in the marketplace with all of the rights buyers you just can't get beyond time difference can you it's just such a you know that that is such a time of year you know like at this at this time of year you're not really competing against the big boys in terms of you know nba nfl you know it's major league baseball early part of the major league baseball season so you know not sort of a lot of jeopardy around that so it's all you know there's a lot of different factors that make a summer tournament that happens on the continent work well?

19:34Yannick Ramcke:And ultimately, it's every time the same question, right? Whether it's Olympics, whether it's a FIFA World Cup, how much of the momentum sticks around and up the base of which you build upon the next time around. Do I think that the base will be higher? Yes. Do I think it will be significantly lower than the momentum wave and euphoria that we are riding right now? also yes as always so and I think we have some concrete numbers right now with because we had a top five European football league in the market that went to market right when the World Cup happened and all at the peak of this hype and momentum and they got the reality check in terms of what market prices are and what and how this compares to previously paid fees or

20:24Murray Barnett:in-house expectations okay right let's move on we've got a story that is a nice one for us because we talked about sky in germany or yannick gave us a bit of detail in the last episode we've got this sky is 1.6 billion pound itv takeover um murray take us through this what's what's happening there's the obvious question for our audience is what this means for the sports rights market and what rights holders will be looking at when they see this deal but just what what's your view i think that's the fascinating thing about it is that i don't think that the itv story is necessarily about sports at all you know we've talked in in bundles in the past about you know whether that's sort of you know paramount warner brothers and where sports sat in their thinking within it and you know as people that sort of work and and live in the sports business i think you become sort of very egotistical about how big and how important sports are but I think this is another example of where sports is a bit of an afterthought and yes it's going to it's going to be a factor in this and it throws up some fascinating potential opportunities for sport but in actual fact it's nothing and nothing to do with sport it's about customer acquisition right as everybody's moving towards streaming related services once you pick everything apart it's really about sky buying itvx i think that the the public service remit or the free-to-air nature of the itv linear channels is it's kind of a nice to have and gives them some other heft and some other opportunities but it's really about acquiring a much broader platform as they're starting to see subs topping out on on the sky platform can we just run just yannick before i get you in here again the obvious question is the premier league just running the premier league through this so you've got the rights coming out in 28 is it i think yeah how when they look at this i'm just wondering does it change anything is this something that they're going to say right okay how do we balance this am i are we going to give stuff on itvx for free explain it's a it's a it's a fascinating question because if you look at just the the free-to-air element the two current partners for premier league both have free-to-air channels for the next auction so does that reshape the way in which either the premier league approach approaches an auction to take advantage of that window which may help them from certain regulatory perspectives especially with now an independent football regulator coming in you know does that does that play at all into their thinking or conversely is it the other way around where that's actually an asset that either of those parties can bring to play which makes their the premier league look more favorably you know on their bid and we at this stage we just don't know but you've got to you've got to think that there's some game theory going on on both sides of the table about what that could mean for Premier League.

23:35Murray Barnett:And we can go on and talk about this in a minute, but it also has some interesting implications for some other sports as well. Janik?

23:41Yannick Ramcke:Yeah, before we go to other sports, because I think there's an interesting angle. And speaking of sports, I fully agree, Marie. As we manifested before, the most difficult business is a single sports proposition. The second most difficult one is pure sports. It's all more challenging than having like this four cross-grid streamer that addresses male, female, young, old, where you have a much broader portfolio proposition than sports only, because sports only carries you so far. But I think it's the same hypothesis or similar hypothesis compared to what happened in Germany, just in the reverse.

24:22Yannick Ramcke:Right now, the one party is acquiring the other. The paid broadcaster is acquiring the free-to-air commercial. In Germany, it was the other way around. But ultimately, it's about, I think, another theme that we mentioned before, go big or go home. I think this is about scale. This is about competitiveness in the grand scheme of things, building a local champion. So it is a lot about content and competitive viable content proposition that can compete and live up to anyone else who's competing for the same consumer disposable income. If you want to look at sports and free-to-air, I don't think it makes a big difference for like a fully paid property like the Premier League, which haven't been in free-to-air, if I'm not mistaken, like forever, or ever since its foundation in 1992.

25:15Yannick Ramcke:I think where it could have just one example where it could have material impact is for listed events that require some free-to-air exposure. Because if you talk to rights owners or to agencies selling on behalf of rights owners, this listed event regulation is putting significant downward pressure on any willingness to pay by pay TV channels or operators. Now, if you have both sides of the fence in-house, by ticking the box on the free-to-air requirements, I think that might be a consideration how for listed events it could have an impact. And the other one is what Maurel was already sectoring into regarding back to squeezing the middle.

26:03Yannick Ramcke:I could imagine that some mid-tailed properties will get further squeezed in the sense of they might be paid in reach, potentially revenue share, rather than guarantees going forward. I think it's another consideration when we look at, okay, you have this free-to-air outlet, not part of your ecosystem. How could it impact sports or sports properties? Listed events and mid-to-long-term properties may even more get paid with reach or with love instead of hard-earned guarantees.

26:36Murray Barnett:I think one sport that should be looking at this with great interest is rugby union because, is, you know, traditionally Sky has shown, has been very invested in rugby union in the past. And as we've talked about in previous bundles, have sort of fallen out of love or just fallen out with the sport of rugby union to a large degree. And ITV, conversely, has invested quite heavily in whether that's Six Nations, the name of the new competition that I keep forgetting about, the National Nations Cup. and then the rugby world cup so you've got you know a free-to-air broadcaster with three properties there they've shown premier league highlights in the past does that give rugby union a way back into sky under the new partnership or sorry not partnership under the new entity if you like that's a good question it's a quite you'll have heard i i asked jonathan licked the murray barnet question about sky's memories of rugby and you know and obviously he batted it away and but it's quite an interesting you know the sort of the long memory of sky in relation to rugby i think he's a really nice thought and whether this gets around it the other bit i was wondering the other thing he mentioned when jonathan licks was talking was he used the phrase national champion which again is a that's the positioning that they're looking at as you would never have they would never have used that language you know previously and there's a sort of moment there's a window they can see that i'm sure that they're looking at the regulatory pressure that they or they can they can sort of resist or they can move now in a way that they were probably couldn't previously in the the framing of a world of streamers and global streamers they are positioning themselves as national champions but also the the sort of protection against Netflix, YouTube and the rest.

28:38Murray Barnett:I mean, it's a really interesting point. There was something I wanted to ask Yannick actually was, you know, when you look at the moves that Paramount have made with Warner Brothers and you look at this, when you fast forward to say like the 28 Premier League auction, is that a good thing for Premier League or a good thing for the bidders? because I think one lens you can look at it through is that it's very, very difficult for anybody other than Paramount, Warner Brothers and Sky actually being able to make compelling offers for Premier League because they've got that much wider opportunity to exploit it as opposed to pick somebody at random like a Premier Sport or somebody like that.

29:29Murray Barnett:I mean, OK, you know, the streamers may or may not be in, but I think there's an argument that says that they're starting to build a wall around the asset that they have in Premier League. And it's going to be more difficult for other people to come inside.

29:44Yannick Ramcke:No, I think the rule of thumb is really you need at least one more viable bidder than packages you have. all of a sudden you have a competitive scenario and that is back to this is pretty much the daily bread or the core mandate of a rights owner to create those competitive sets but this is obviously like an external development i think it's not about the number of bidders but the number of viable bidders and is itv on a standalone basis a viable bidder for any high value premier league packages i would dare to doubt this is the combination sky and itv more powerful and also maybe be able to better monetize any ip i think it is because if you look at the playbook that also sky germany and rtl are now doing we discussed about impact on sports there will be cost synergies But I also think there is and there are revenue synergies.

30:46Yannick Ramcke:And I think the go-to tactic, and we see this with Sky putting content on free-to-air RTL right now, is to unlock some incremental value through better utilization of the rights portfolio. By selectively putting things on free-to-air, not to drive consumer uptake. I don't think I don't believe in this cost selling and then you expose content here and then they sign up over there. I think consumer is stubborn. I think there's a lot of friction. I think conceptually it makes sense. But in practice, I see a lot of disconnect in there. But I think what will be the go-to strategy is to window certain paid content or previously payable content on free to air to unlock incremental value through advertising and sponsorships.

31:36Yannick Ramcke:without undermining the pay value. So the pay value, the integrity of the pay value still must be there for the paid proposition. You can't dilute this, but I think this is the balance the leader that you try to thread right now to realize incremental value in the form of advertising revenues without a positive impact on subscription revenue, but at least without any negative impact. Because live sports is still the one appointment television in a fragmented media marketplace that can pull a sizable audience. And this will only become more variable as marketplace becomes more fragmented.

32:17Murray Barnett:I wonder if the loser out of this, assuming that the Premier League auction structure stays largely similar, is actually BBC Highlights, Match of the Day. And actually you will see a Sky or a Paramount for that matter turning around and saying, well we have free-to-air outlets and we it gives us an opportunity to sort of cross pollinate a little bit even if it's not you know as Yannick says not necessarily super super successful but I would have thought the logic is that if you now have a free-to-air outlet in ITV or in Channel 5 in Paramount's case that you would say why would I allow a third party albeit a non-commercial third party to also have access to premier league when i don't have an opportunity to monetize it and then against the backdrop the bbc is also you know has been taught a lot about so you know struggling with with rising rights fees and and its cost structure it seems logical to assume that highlights could end up on on five or itv the rep the rest is match of the day on netflix surely maybe okay right let's move on is the sports doc gold rush over so we're talking about documentaries and there's some interesting bits and bobs of data obviously the uh netflix drive to survive is the is the sort of cornerstone of this whole story and projects that sold for seven to eight million not 78 seven to eight million are now getting offers of nearer two million ampere data suggests that documentary viewing has fallen from 642 million hours in the second half of 2023 to 349 million hours in the corresponding year two years later so 2025 so from peak drive to survive sort of era where all the conversation was nearly three years ago and that's down nearly a half so 46%.

34:16Murray Barnett:What's happening, Yannick?

34:19Yannick Ramcke:I think we see the market correction in the sense of, just like with life rights, it's really a much more rational market environment at the moment. It's always about, okay, what moves the needle, what doesn't. We have moved from growth at all costs and whatever way, form or fashion to bottom line profitability. And I think it's just a rationalization of how much growth is such content? Does it move business metrics? And I think this was a bit skewed due to the success of Drive to Survive that many, many believed in that concept of translating into tangible business impact. I think it has been really replicated.

35:04Yannick Ramcke:And yes, you can make the argument that the live rights are also more commanding part of the content budget sizes. I think content budgets are quite fixed, all of this. But I think ultimately, whenever you do an investment decision, you need to back it up by data. And I think there is simply not the data to back up the level of investments that you have seen there in the past. So, and the final point I may look at this documentaries or like reality shows where always cheap content to produce. Like it's much cheaper per minute and like fiction, highly produced and so on. So I think there is a point but just the premium that was paid on the hope or expectation of having actually outsized business impact is just not justifiable anymore because the viewership data tales um tales otherwise there was a great line in the original park article which said