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Sports

Some Early Shockwaves From EPL

Unpredictability and sports seem to go hand-in-hand.

Premier League media rights will go to tender and auction in many Asia-Pacific markets towards the end of this month, yet some early shockwaves are already being delivered in a region that’s proved increasingly lucrative for English football.

Similar to knockout punches delivered by NBC in the US and BeIn in the Middle East, Chinese digital juggernaut LeTV appears to have secured exclusive EPL media rights in Hong Kong for US$400-500 million over three years (starting 2017), pending a formal announcement Sept. 21.

The price tag represents steep inflation from the estimated US$200 million PCCW’s Now TV paid for the last cycle. That deal helped boost yields and growth across Now TV’s ~1.3 million pay-TV customers.

In recent years, both online and pay-TV piracy have substantially grown in Hong Kong, impacting both sports and entertainment. There are about 350-400,000 illegal set-top boxes in the market.

LeTV is keen to emulate its Chinese ecosystem in Hong Kong, building out online and streaming video distribution for channels and content, adjoined by entertainment and its own dramas.

Earlier this year, company management confirmed plans to invest US$775 million in its Hong Kong business, leveraging sports and entertainment from players such as Sanlih, China Star Entertainment, Pegasus, Celestial Movies, Orange Sky, Golden Harvest, Fortune Star Entertainment and My Way Film.

The company has set up an office in Hong Kong and has launched its branded TV sets and smart set-top boxes bundled with SVOD services, including Chinese dramas and movies as well as overseas content.

A 50” 4K set costs HK$5,000 (US$645), while a 40” HD set sells for HK$2,000. Buying a set also allows consumers to purchase a 12-month LeTV subscription for HK$990, effectively including two free months from the HK$99/month standard rate.

A standalone 4K box, which includes a complimentary subscription for six months, sells for HK$599.

In China, LeTV produces branded TV sets (Super TV) and charges ~RMB500 (US$82) per year for the use of its SVOD library.

The company had about 1.5 million active users in 2014, while content investments totalled ~RMB1 billion (US$164 million) in the same year.

These leveraged external acquisition together with LeTV’s own investments in producers such as Flower TV and LeVision Pictures, in addition to an expanding sports rights portfolio.

LeTV recently acquired rights to show over 1,800 hours of live football in China, including France’s Ligue 1, Italy’s Serie A and England’s FA Cup in a deal with sports agency MP & Silva.

The company also has non-exclusive digital rights to Uefa’s Champions League and Europa League.

WHAT NEXT FOR EPL

For the Premier League, all eyes are now on the league’s primary Southeast Asian markets: Singapore, Malaysia, and Thailand, where the last set of rights sold for up to US$250-300 million in each market, and Indonesia, which came in at US$65 million.

It was widely thought that inflationary pressure for rights had eased across Southeast Asia.

However, an aggressive BeIn Sports may have different plans, potentially working with or bidding against incumbents and competitors.

BeIn recently won media rights for La Liga football in multiple markets, and plans to license the content to key media and telecom groups in Singapore, Malaysia and Indonesia.

Macro softness has limited both retail and wholesale demand for EPL in most Southeast Asia markets, reining in consumer spends while depressing currencies and advertising.

An OTT window, however, could pick up the slack over the medium-to-long term, in terms of demand and potentially pricing power.

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