Making football affordable to all

Making football affordable to all

SINGAPORE - Football fans up in arms over the high price of $112 they have to pay to watch the World Cup this year are asking: Why? And can it change?

The first question is more straightforward.

Football broadcast rights in Singapore are essentially a game between two pay-TV operators - SingTel and StarHub.

National broadcaster MediaCorp has been sitting out of the bidding war for the World Cup broadcast rights since 2002. The previous cycle in 1998 was the last time MediaCorp bid for the rights to air the matches. A spokesman said: "The licensing fees and the business environment were favourable then."

When there are two potential competitors, simple economics predicts that prices will get bidded up. In contrast, public TV broadcasters NRK in Norway and DR in Denmark jointly own the rights with pay-TV operator TV2 in the two respective markets.

In Singapore, a similar joint bid involving Media- Corp - should it want to get involved - and any of the pay-TV operators would also help reduce cost pressures.

It makes sense for free-to-air broadcasters and pay-TV operators to join forces because they are not direct competitors.

Over in Hong Kong, TVB - which is both a national broadcaster and pay-TV player - has the World Cup broadcast rights.

This is why many matches will be available for free compared with the four in Singapore that will be aired by MediaCorp, which sub-licensed them from SingTel.

By submitting joint bids with NRK in Norway and DR in Denmark, pay-TV operator TV2 halved its costs although it would not disclose the price it paid.

As such, it could price the matches affordably in Denmark and provide free viewing for all matches in Norway.

Over in Hong Kong, a TVB spokesman told The Straits Times that it was prepared to lose money on the games. "We may or may not recover the entire costs for broadcasting rights and production...partly because of the pay channel."

The station relies mainly on television advertising for revenue. As such, it can offer free viewing of 22 matches to secure the TV ads.

TVB may also have a political agenda. It has been trying to win public support for its court appeal against the granting of a new free-to-air TV licence in Hong Kong.

Here, even if the national broadcaster is not interested, another way to keep prices down is for a joint bid to be submitted by SingTel and StarHub. This was a point StarHub did not fail to highlight when SingTel announced on March 12 that it had sealed the exclusive deal with Fifa to broadcast the World Cup matches here.

StarHub complained about being spurned by Sing- Tel. StarHub said it made a "sincere offer" to SingTel to submit a joint bid just like the last World Cup in 2010. But SingTel went ahead to propose to Fifa an exclusive deal. SingTel later explained the two operators were unable to agree on a joint offer that would "meet the content rights holder's expectations".

It is not surprising that they could not agree on the terms of a joint offer. After all, they compete head-to-head for business.

But in fact, SingTel and StarHub had submitted a joint-bid for the 2010 World Cup. Some critics ask why they could not work together again for the public's interest.

It's easy to forget that circumstances have changed since 2010.

Then, SingTel and StarHub were probably more desperate to seal the deal than they were this year.

Back in 2010, World Cup rights holder Fifa had learnt about SingTel's reported $400 million bid for the 2010 to 2012 season of the English Premier League (EPL) in 2009. Singapore reportedly forked out a sum equal to more than a tenth of what the world paid.

With negotiations heading into extra time on the 2010 World Cup that kicked off in June, SingTel and Starhub had to join hands to meet Fifa's demands - reportedly in the region between $40 million and $100 million - or risk the wrath of fans here. A deal was eventually sealed, albeit 35 days before the first match in South Africa kicked off.

But this time round, there was ample time for either SingTel or StarHub to plan their moves.

SingTel did, and outflanked StarHub with its exclusive bid for the 2014 World Cup screening rights. It wanted to use the content to sell more EPL subsciptions. As a standalone service, World Cup matches can be watched for $112 by pay-TV viewers on both SingTel and StarHub's platforms. The content is exclusive, and as such, has to be available on both platforms under the Media Development Authority's cross-carriage rule.

But it is thrown in free for those willing to sign up for or extend their existing EPL contracts with SingTel for two years.

As Mr Ramakrishna Maruvada, head of South-east Asia and India telecoms research at the Daiwa Institute of Research, put it: "SingTel has taken the most effective route to ensure revenue stability for its pay-TV business."

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