Murdoch’s Sky Deutschland Scores Big With Bundesliga Rights

 

COLOGNE, Germany – Rupert Murdoch’s Sky Deutschland knocked competitor Deutsche Telekom out of the running for some of the most valuable sports rights in Europe, winning the auction for pay, web-TV and IPTV rights to Germany’s Bundesliga soccer league.

Sky, which is controlled by Murdoch's News Corp., will shell out more than $2.5 billion (€1.94 billion) for German rights to the 2013 to 2017 Bundesliga seasons. That works out to an average of $634 million (€486 million) a season. Currently, Sky pays around $325 million (€250 million) a season for Bundesliga rights, but its current deal does not include various web-TV, mobile and IPTV rights that are part of the new package.

Sky was expected to score the pay-TV rights to the Bundesliga but many had speculated that Telekom would retain IPTV rights to the league. The German telco currently streams Bundesliga games on its web-only Entertain service. 

STORY: News Corp.'s Sky Deutschland, Deutsche Telekom Face Off on Bundesliga Soccer Deal

Instead, Sky outmaneuvered Telekom, picking up not only exclusive all pay-TV rights to the first and second division games of the Bundesliga for the 2013-2017 seasons, but also live rights for all games on web TV, mobile platforms and IPTV.

“We are pleased with today’s announcement that Sky Deutschland has extended its long-standing partnership with the DFL (German Football League)," said News Corp. President and COO Chase Carey in a statement. Sky Deutschland CEO Brian Sullivan added that the deal, ensuring the Bundesliga will stay with Sky for at least the next five years, both gives the group added security and opens "new possibilities for growth and innovation" in exploitation of German soccer rights.

News of the deal, some details of which leaked out before the  official announcement Tuesday afternoon by the DFL sent Sky shares soaring. Sky Deutschland stock was trading up more than 26 per cent at one point but shares took a sharp dip just after the official announcement, with many speculating Sky may have paid too much for the rights. By mid-afternoon, Sky Deutschland stock had lost much of its earlier gains but was still trading up more than 12 per cent at €2.25.

Losing the Bundesliga rights didn’t seem to hurt Deutsche Telekom stock, which was also up in trading Tuesday, 1.4 per cent stronger at €8.67. Many analysts saw the Bundesliga as an expensive and risky investment for Telekom, so investors may welcome its exit from the soccer rights business.

Sky was the big winner of Tuesday’s auction but public broadcasters ARD and ZDF also secured rights for a handful of live Bundesliga games as well as highlight packages for free-TV. Commercial network Sport1 secured certain live rights to games in the second division, as well as some first division highlights. And publishing giant Axel Springer, which owns Germany’s leading tabloid Das Bild, dived into the sports rights business with a deal for web and mobile highlights of all Bundesliga games. Springer will be able to offer the highlights to paying customers one hour after the final whistle on all games and carry them for free from midnight onward on game day.

The auction was a major payday for the German Soccer League, which stands to earn $3.3 billion (€2.5 billion) over the four-year license period. On average, the League will earn $820 million (€628 million) a season, up from $538 million (€412 million) a year under the current agreements, which run through the end of next season. DFL President Reinhard Rauball called the auction pay day a "quantum leap" for the league.

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