FEBRUARY 22, 2002
Sport's TV revenues have peaked
According to The Financial Times in London, sports are going to struggle to match the revenues of recent years from television companies.
"Pay-TV operators have seen rights to top sporting events as a sure-fire way to attract subscribers," the paper reported. "Yet difficulties in recouping the cost of bids from the most popular events have thrown several media companies into the financial sin-bin".
The FT cited various examples, notably the Swiss company ISMM which went bankrupt last year after overpaying for the rights of a series of sports. The paper also cited the case of a British cable operator NTL which withdrew from a deal to televise the English Premiership soccer games because it would need to sell 600,000 subscriptions for each match in order to break even on the deal. The only sport ever to reach that kind of level was boxing in 1996.
The FT noted that last week Rupert Murdoch wrote off $909m invested in US sports including major league baseball, ice hockey and NASCAR and sold his share of an Italian pay-TV business to rival Vivendi.
This does not bode well for Kirch which does not currently look likely to recoup the money invested to acquire the rights for the World Cup soccer competitions in 2002 and 2006 and in Formula One.
"The reason why Kirch is likely to be disappointed," said the FT, "is that the value of broadcasting rights to many sports has peaked. Media groups that bid high to snap up the most popular events have found the contracts unprofitable as pay-TV take-up has fallen below expectations."
The big question now is how the sport is going to fund itself if it is not by television revenues. The teams are funded by sponsors keen to get the huge exposure offered by F1's TV free-over-air television but there does not appear to be anywhere near as much money coming for the middle men in the years ahead.