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CCTV’s new digital strategy complicates renewal talks for Champions League, Bundesliga and Serie A

EINDHOVEN, NETHERLANDS - OCTOBER 03: Ivan Perisic of Inter Milan gets past the tackle from Denzel Dumfries of PSV during the Group B match of the UEFA Champions League between PSV and FC Internazionale at Philips Stadion on October 3, 2018 in Eindhoven, Netherlands. (Photo by Dean Mouhtaropoulos/Getty Images)

Chinese state broadcaster CCTV is in discussions to renew rights to three of its most important football properties: the Uefa Champions League, Germany’s Bundesliga and Italy’s Serie A.

The deals are late. In each case, it would include the season already under way. The principal reason for the drawn-out negotiations has been a change of strategy at CCTV regarding digital rights. Local media sources say this reflects the thinking of Shen Haixiong, who became president of CCTV in February.

Previously, digital rights were seen by CCTV largely as a defensive investment to ensure other media operators could not take audiences away from CCTV’s linear channels, thus undermining its advertising revenues. Where it acquired digital rights, the content was streamed on the CCTV website, usually in simulcast with linear coverage, without huge attention to monetising the content. Haixiong is said to be building an aggressive new digital strategy.

The problem with the three current football negotiations is that extensive digital rights have already been sold to the Suning conglomerate, whose PPTV subsidiary owns the PP Sports streaming platform.

Champions League

CCTV is at an advanced stage of discussions to secure linear television rights to some Champions League games from Suning, which holds exclusive rights to the competition in the country. One informed source said the talks are “difficult” but that an agreement could be signed off before the end of October.

Local experts say CCTV is unlikely to pay much more than $2m (€1.7m) per season for the rights because Uefa’s centrally-sold broadcast sponsorship deals limit the categories of brands it can sell to and the amount of airtime available. Broadcasters around the world have accepted these limits since the Champions League was launched in 1992. CCTV is said to have always had an issue with them.

Suning acquired the rights for the current three-season cycle, from 2018-19 to 2020-21, earlier this year. It is thought to be paying about $40m per season. This is more than three times the $12m per season Uefa earned in the previous cycle through multiple deals – one of which was with CCTV, worth about $2m per season – but a fraction of the fee offered by DDMC’s Desports agency in late 2016.

Desports is understood to have made a first-round bid of about $480m over three seasons, an average of about $160m per season. The bid came at the height of China’s short-lived sports-rights boom, driven by the arrival of aggressive new digital players. The offer came with conditions that Uefa considered unacceptable and the price was gradually lowered in subsequent talks. But a deal was never signed off because Uefa was not convinced of the authority of the bank guarantees put forward by DDMC. Uefa and its sales agency, Team Marketing, were forced to go back to the market in a far more difficult climate.

European football’s governing body will not benefit financially from a Suning sublicensing deal with CCTV, but Champions League sponsors will be happy that national free-to-air coverage is being provided. Under the Suning deal, coverage is shown on PP Sports.

Additional coverage is being provided by streaming platform Youku, owned by retail giant Alibaba. Suning Sports, the sports unit of Suning, and Alibaba entered into a strategic alliance in July. Suning said the two parties would jointly create a Youku PP sports platform. The two companies have a wider business relationship dating back to 2015.

Bundesliga

In April 2017, the Bundesliga agreed a five-season deal with Suning worth $50m per season, from 2018-19 to 2022-23.

The deal represented a huge increase in value for the league. In its previous three-season cycle, from 2015-16 to 2017-18, it earned about $3m per season from deals with CCTV and the China Sports Media agency.

Despite paying a large fee, Suning was obliged to sublicense non-exclusive rights to two matches per match-week to CCTV. Suning and CCTV failed to agree on price and Suning’s option to sell on the rights has now expired. Bundesliga International, the league’s subsidiary responsible for selling its international rights, has taken over the negotiations with CCTV.

The league is said to be confident it can at least match the $2.5m per season it earned from CCTV in the 2015-16 to 2017-18 cycle. Local experts say this is optimistic. In its last deal, CCTV had rights to the top three matches each match-week.

Serie A

The IMG agency this summer agreed a three-season deal with Suning for digital rights to Serie A, from 2018-19 to 2020-21. The deal is thought to be worth close to $20m per season. This would represent a large increase on the value of the rights in the previous cycle.

A like-with-like comparison is complicated as the MP & Silva agency, the previous international rights distributor for the league, bundled Serie A rights with other properties. It is also complicated because one of the agency’s deals, with online streaming platform LeSports, was terminated after the 2016-17 season.

But it is thought the agency considered the total value of Serie A rights in the country to be between $7m and $8m per season. It had deals with CCTV for the full three seasons, LeSports for two seasons, and streaming platforms PPTV and Tencent for the 2017-18 season only.

IMG acquired Serie A international media rights in October 2017 for €340m per season. As part of the agency’s presentation to league clubs, it promised higher revenues and greater visibility in China. It is thought that IMG’s deal with the league includes an obligation to secure coverage on CCTV.

One source close to the state broadcaster said Serie A was “not high on CCTV’s priorities” but it is still expected a deal will be agreed.

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