THE REAL WORLD CUP PRIZE – TELEVISION BROADCAST RIGHTS

For television broadcasters preparing to cover the tournament, by some measures the world’s biggest sports event, the odds will be nearly as challenging. The World Cup is expected to provide them with a welcome increase in viewership and advertising, but the soaring price of broadcasting rights means that few will actually make money from the event.

Several mainstream free-to-air TV channels have found the math so unfavorable that they have ceded broadcast rights to rivals, including pay-TV channels that have previously found it hard to break into the World Cup. In Europe, the Middle East and parts of Asia, more of the tournament than ever before will be shown on premium cable or satellite channels, instead of broadcast outlets.

While pay-TV companies long ago secured the rights to top European league football, commercial broadcasters and public TV companies had managed to hold on to the World Cup across most of Europe, the largest TV market for the tournament.

By bringing pay TV into the mix, FIFA, the tournament’s governing body, has been able to generate significantly more revenue from the sale of TV rights. Worldwide, this has generated USD2.15 billion, up 53 percent from the 2006 event, according to Sportcal, a research firm.

“There’s always debate in the sport business between maximizing revenue and maximizing coverage,” which is important in order to keep sponsors happy, said Ezechiel Abatan, senior researcher at Sportcal.

“FIFA has been pretty good at doing both.”

Now, as free commercial channels and public broadcasters wrestle with budgetary constraints, pay-TV providers, which have come through the recession in better health, are making further gains.

In France, for example, eight of the 64 World Cup matches will be available only on Canal Plus, a pay-TV provider. The opening for Canal Plus came when TF1, a commercial broadcaster that had bought French rights to all the matches, offered up several packages of games to rivals last winter after a plunge in advertising revenue during the recession.

“The rights fees have gone up so much, many broadcasters are not going to be able to cover the cost through advertising alone,” said Tim Westcott, senior analyst at Screen Digest, a research firm in London.

Screen Digest estimates that the World Cup will add up to 2 percentage points to growth in global TV advertising revenue this year. For a broadcaster like TF1 in France, the firm said, that could mean an extra 30 million euros (USD37.5 million).

But TF1 spent 120 million euros on the rights, reportedly recouping only 33 million euros of that when it resold some matches.

European regulations still require crucial games of national interest to be shown on free TV. Generally, those include the final, semifinals and any match involving the home team.

In Britain, however, the entire tournament is subject to such rules, so broadcasts will be shared between the public British Broadcasting Corp. and a free commercial broadcaster, ITV.

SOURCE: The New York Times