Amazon Should Get an Open Goal from the Premier League Sky BT

(Bloomberg Gadfly) -- The Premier League has a problem: the price broadcasters are willing to pay for TV rights to each game is dropping. 

Hopes that bids from a tech giant could stoke the latest round of bidding for England's top domestic soccer competition have proven unfounded. Sky Plc and BT Group Plc have already sealed deals for five of the seven packages of games on offer, paying a combined 4.4 billion pounds ($6.2 billion) for the rights to 160 matches over three years. With BT gladly accepting its role as the number two player, the bidding war was distinctly less frenzied. 

It's not too late for the league to gin up more competition for bidding next time, in 2021. Two more packages of 20 games each are up for grabs, and it should do all it can to ensure Amazon.com Inc. secures rights to at least one of these.

The other obvious tech candidates present pitfalls. If fans get accustomed to watching games for free on Facebook Inc., rather than subscribing to cable channels that have paid handsomely for the rights, that could reduce the number of bidders in future. Twitter Inc. lacks financial clout -- its $2.4 billion in annual revenue is a little less than BT's net income.

That leaves Amazon. The Premier League should offer it a cut-price deal to broadcast the games through Prime Video. The streaming service is a benefit of Amazon Prime, which costs 79 pounds ($110) a year in the U.K. Prime members get faster delivery times and spend an average $1,300 annually on the website, compared with the average $700 from other customers, according to Consumer Intelligence Research Partners.

Luring soccer fans gives Amazon an opportunity to kick up Prime subscriptions and bolster revenue from members, who are more inclined to order other products from the e-commerce giant. Prime growth flattened last year, and a Premier League tie-up could improve that trend. There's precedent here: BT's user growth accelerated after it first secured broadcast rights in 2013. 

If this works, the Seattle-based company may be more inclined to bid for the league's bigger packages next time around. That could make the bidding process for those flagship offerings more competitive, and resurrect the growth trajectory on a cost-per-game basis. 

That the remaining packages this year are for the less appealing midweek games need not be a concern -- viewers are more likely to watch midweek games at home than in a pub. And the first month of Prime membership is usually offered free, making it an easier sell.

So why should Amazon get a discount? It wasn't a serious contender for those larger packages, suggesting it has reservations.

Sport is best enjoyed live. When Amazon agreed to pay about $7 million an episode for "The Grand Tour," it knew the car show would attract viewers long after the initial broadcast. That's unlikely to be the case for soccer matches, which are also far more expensive: Sky and BT will pay a little over 9 million pounds ($12.5 million) a game. Amazon might have a greater stomach for risk than other tech companies, but that's more than double the $5 million-a-game price it paid for NFL rights last year. 

Given all those risks, the Premier League should be prepared to offer a significant discount.

Asking for 5.6 million pounds per game would enable it to make the same amount per season as it has been for the prior three years. But that would still equate to 224 million pounds a year -- more than six times what Amazon now pays to air some National Football League games.

The league should offer the games for significantly less, knowing that with the current bidding round they'll likely make up the difference in the international market -- Chinese rights for the three seasons starting in 2019 sold for about 12 times the previous total. Should the games succeed in securing Amazon more subscribers, today's discount could reap rich rewards for English soccer tomorrow. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Alex Webb is a Bloomberg Gadfly columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.

1. That Sky secured a lower price could only have added to the case for Comcast's interest in buying the company

2. At any rate, Twitter's tentative steps into sports broadcasting with the National Football League, at a cost of million for games in were a pet project of now departed  finance chief Anthony Noto. 

3. Amazon paid million to broadcast NFL games for the most recent season. 

To contact the author of this story: Alex Webb in San Francisco at awebb25@bloomberg.net.

To contact the editor responsible for this story: Jennifer Ryan at jryan13@bloomberg.net.

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