Cable Tech

A major TV sports upset is on the cards

Lockdown is turbocharging the evolution of the human race into the fat-limbed blobs of WALL-E, permanently seated in movable chairs, unusually dextrous with a remote control.

Actually, two species are likely to emerge from this pandemic, like the Morlocks and Eloi of HG Wells's The Time Machine. The first shuns daylight, weighs about 20 pounds heavier than before COVID-19 and is a whizz at navigating Netflix. The other – who got religious about self-improvement – has a gymnast's physique and can be spotted mid-contortion in the backyard by binocular-wielding, curfew-conscious neighbors. Each morning he tunes into Joe Wicks, an exercise guru with his own YouTube channel, for an online class of burpees, mountain climbers and other fitness weirdness.

In different ways, TV figures prominently in the lives of both the WALL-E blob and the Wicksian. But in one their viewing habits are identical: Ignoring Joe Wicks and his breathy exertions, neither is watching any live sport.

Man, post-COVID-19.
Man, post-COVID-19.

Whether you get your kicks from the Olympics, Wimbledon tennis, Premier League soccer, Six Nations Rugby or something more American, most sport is temporarily finished as a professional endeavor. Athletes paid outrageous sums to entertain less sporty fans are parked at home like the supercars they drive, draining their batteries but at least avoiding any damage. To the Wicksian extent possible, sport is now something you do, not something you watch.

For service providers that have pole vaulted into sport, there could now be a long drop. Not many operators have said much publicly, but the next round of financial reporting could throw up a few sports-related shocks. Last year, Sweden's Telia realized earnings for the first quarter of about 1.5 billion Swedish kronor ($150 million) at its TV and media business. First-quarter earnings this year could be wiped out altogether, it warned investors last month. The reason? A rapid decline in advertising revenues, explained the operator. "In addition, the global cancellation of sporting events has had a negative impact on our pay-TV revenues," added Christian Luiga, Telia's acting CEO.

European operators, including the UK's BT, Spain's Telefónica and Comcast-owned Sky, have splurged billions on expensive rights to screen soccer and other sports events now canceled. When BT revealed in January that nine-month free cash flow had tumbled 42%, to £1 billion ($1.25 billion), it held the outlay on sports rights partly to blame. Last May, the English Premier League alone secured $12 billion in international broadcasting rights for three seasons, an 8% increase on its previous take.

Wrapping sports channels into a juicier entertainment bundle – as many service providers do – could mitigate the risks, dissuading customers from "cutting the cord." Yet sport is often the big attraction, the only defense operators have against a barrage of online content provided by Amazon, Apple, Disney Plus, Netflix and other digital adversaries. The deals operators have signed "underline the importance of sports rights as a 'linchpin' holding many traditional television bundles together," said Stefan Hall, the project lead for media, entertainment and culture at the World Economic Forum, in a recently published blog.

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Market-research firm Analysys Mason highlights the danger in a report out this week: Disruption to live sport, it says, "will have a marked negative impact on retail revenue in 2020, affecting both the traditional pay-TV segment and operator OTT [over-the-top] services. Revenue will decline by 4.7% overall in 2020."

Others warn of a permanent dent in the TV business. "It's obvious that the multi-month loss of traditional sports will accelerate cord cutting," says Matthew Ball, a venture capitalist and the former head of strategy for Amazon Studios, in a detailed blog. "And while some of these subscribers will come back once sports resume, many won't." Ball's assertion is that a downturn triggered by COVID-19 will accelerate the pace of cord cutting. "Recessions force hard choices and many choose to abandon the old, dying thing earlier than expected."

Internet companies like Amazon have been moving into sport, but they aren't doing it quickly. And viewing behavior had already shifted before the coronavirus outbreak. Many teenagers are likelier to snack on content, including sports highlights, than settle down for a 90-minute soccer match, let alone the televisual banquet of test cricket. Among older generations, a live-sports drought lasting several months or longer might force a permanent migration to new lifestyle activities.

Alarmist? That depends on whether the impact of COVID-19 is felt long after the pandemic has passed. Post-virus, no one knows if people will throng pubs, crowd onto public transport, take holidays abroad and even embrace friends with the same enthusiasm as before. Those habits might not be the only ones that change.

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— Iain Morris, International Editor, Light Reading

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