The Nordic Entertainment Group (Nent) said today (Thursday) that it has been refunded 100 per cent of its broadcast rights fee for ice hockey’s recently-cancelled 2020 IIHF World Championship.
Speaking upon the presentation of first-quarter financial results, Nent today reiterated its tough stance on sports rights fees, saying that it would also expect to be refunded for any Premier League and Uefa Champions League matches, or Formula 1 races that end up being cancelled.
Nent had been set to broadcast the IIHF World Championship in both Norway and Sweden but the event, which was set to be staged in Switzerland, was cancelled because of the global spread of the Covid-19 pandemic.
Commenting on Nent’s various sports rights contracts, Anders Jensen, the broadcaster’s president and chief executive, said today: “We’re in close contact with the organisers to discuss how things will be handled moving forward. We have in the meantime stopped amortising sports rights and we’re not making any new payments for postponed sports rights until they resume.
“We do expect to receive compensation for any sports events that are cancelled and indeed have already received back 100 per cent of the costs for this year’s ice hockey World Championship that was due to be held in Switzerland.”
Broadcast rights to the 2020 IIHF World Championship were sold by Infront as part of the agency’s long-term minimum guarantee deal with the International Ice Hockey Federation. However, Nent secured the sub-licensed rights in Sweden from public-service broadcaster SVT.
Infront’s current IIHF media and sponsorship rights sales deal runs from 2018 to 2023 but that agreement was recently extended by 10 years (from 2024 to 2033). The agency last year agreed a pan-Nordic deal with Nent for the rights from 2024 to 2028.
Nent was the first broadcaster to deliver a tough public stance on rights fee payments and, speaking to investors and analysts today, Jensen insisted that the broadcaster would be due back rights fee payments for any events cancelled (as opposed to postponed).
He remarked: “We are contractually entitled to on a pro-rate basis get back [rights costs for] any non-concluded sports events, whether that is the Premier League or Champions League or anything else. We will of course not get money back for the matches already played but we will get money back if something is cancelled.
“With the ice hockey the money has been paid back to us. We do expect some Formula 1 races not to be concluded and we will get money back for those, while some will be concluded.
“[For] Premier League, Champions League and football in general, we do expect that the leagues will do everything they can to get back to some sort of completion of the season during the summer. But we are entitled to 100-per-cent pro-rate compensation for cancelled events.”
On the back of the IIHF World Championship cancellation, along with the cancellation of various golf tournaments in Europe (including the British Open) and certain Formula 1 races, Nent expects to reduce its sports cost spend by around SEK200m (€18.4m/$19.9m) this year compared to the initial plan.
However, the broadcaster said today that it has made pre-payments for its recently-agreed €2.3bn ($2.5bn) six-year Premier League rights deal (from 2022-23 to 2027-28).
Pre-payments for the new Uefa Champions League and Europa League rights contract are to be made in the third quarter, according to Nent.
Champions League rights loss, Viaplay strong during Covid-19 crisis
Earlier this month, the broadcaster announced the acquisition of exclusive rights to the Uefa Champions League in Denmark and exclusive rights to the Uefa Europa League and Europa Conference League in Finland, Norway and Sweden, from 2021-22 to 2023-24.
However, the rights have been lost in both Norway and Sweden with Telia, the telecoms group that owns Bonnier Broadcasting, expected to be soon announced as the rights winner in the latter.
On that rights loss, Jensen said: “We have stayed true to our commitment to make a positive return on all sports rights, so we will let go of the Champions League rights in Sweden and Norway after next season as the price inflation moved well beyond what we could justify.”
He also said that he doesn’t anticipate a negative effect on Nent’s sports subscriber base as a result given the recent bolstering of the portfolio through new Premier League, Bundesliga and Formula 1 deals.
On the Covid-19 effect on sports subscriptions, Nent said: “Our sports base was only down 11,000 in the quarter but was up compared to last year, which demonstrates that our early decision to reduce the sports package pricing to the TV and Movies price point on March 13 was the right one, even if of course we’ll have a significant short-term effect on our revenue growth.
“New sports sales have been predictably low since the postponement or cancellation of almost all sporting events, but churn has also been very low as viewing of non-sports content by sports subscribers has increased dramatically in recent weeks. It is clear that there is a huge build-up in demand for live sports when the leagues and events resume.”
Nent’s subscriber total across all genres for the Viaplay streaming service was up by 314,000 from the first quarter of 2019 to reach a total of 1.67 million.
Nent remarked: “Subscription revenues were up 5 per cent and accounted for 67 per cent of Q1 sales…
“…subscriber intake remained very strong and viewing levels increased substantially, partly driven by many people staying at home. The launch in Iceland at the beginning of this month has gone very well, and we are planning for further geographical expansion in 2021.
“We now expect our full-year subscriber intake to be approximately 400,000, which would be 25-per-cent growth in the Viaplay subscriber base in 2020.”
Advertising sales were down by 13-per-cent year-on-year as demand levels were severely impacted by the coronavirus crisis. March advertising revenues were down by 17 per cent, and April revenues are expected to be down by 25 per cent.
Overall, Nent reported net sales of SEK3.66bn in the first quarter of 2020 (compared to SEK3.73bn in the first quarter of 2019) and operating income rose narrowly to SEK219m. Net debt is now SEK4.57bn.
The broadcaster has also unveiled a new SEK700m cost savings programme, including savings in freelancer and consultant costs, content savings and lower travel and marketing spend. This is on top of the SEK250m of savings already announced.