Hell hath no fury like a sports broadcaster scorned (as William Congreve did not quite say)

Canal Plus (Canal+) last week agreed a €697m five-year extension to its broadcast deal for French Top 14 rugby, a solid 14% uplift on its current deal. It’s a scenario the English rugby Premiership can only dream about, and I plan to return later to the issues around the widening gap between French and English rugby, but I was initially intrigued by comments on the deal from Maxime Saada, the CEO at Canal+:

“… because it has always been there for us, we will always be here for French rugby.”

It might sound innocuous, but not for those in the offices of the LFP (the entity that sells right to Ligue 1, the top French football league), because this comment was aimed squarely at them. Maxime is normally a mild-mannered sort of guy, so this was an unusually barbed comment. What’s going on?

Canal+ has been the broadcast partner for Top 14 rugby since 1998, and its links with the LFP were also longstanding. But the latter relationship ruptured a few years back and the wounds clearly have not healed.

In 2018, the LFP sold the bulk of its Ligue 1 rights, 8 matches per week, to MediaPro, a new entrant, for €780m pa. Canal+ paid €330m pa for the other 2 games per week. The LFP thought it had hit the jackpot, but it was a tough pill for Canal+ to swallow, now reduced to the role of minority partner, pushed aside by the new kid on the block.

To the surprise of nobody, except perhaps the LFP, MediaPro collapsed a few months into the first season of the deal and handed back the rights. Like a loyal long-term partner, Canal+ stepped in to complete the season and probably expected that the LFP would re-run the auction.

But the LFP chose a different path. It banked the original €330m pa bid from Canal+ and, while Canal+ was complaining unsuccessfully to the courts and the competition authorities, sold the other 8 matches per week to Amazon for a knock-down price of €250m pa. Canal+ was dismayed to be left paying €330m for 2 games while Amazon, a new entrant, was handed 8 games for €250m. Canal+ could be forgiven for thinking that the LFP had taken advantage and “done the dirty”.

Roll forward to the next LRP auction of Ligue 1 rights and the chickens are coming home to roost. Nine months since the tender was issued in September 2023, and the with the new season only two months away, no new broadcast deals have been announced.

MediaPro is not welcome back and Amazon is presumably interested in one game per week at most, in line with its recent strategy elsewhere in Europe. There have been claims for months that DAZN (or perhaps beIN) will step in, but no announcement yet. And what of the league’s reliable long-term partner? Having securing rights for the Champions League and English Premier League, Canal+ has confirmed publicly that it will not be bidding for Ligue 1 rights at all.

This is a major problem for the LRP. Canal+, slighted and taken advantage of in 2018, has moved on and this was the message that Maxime Saada was sending with his comments on the Top 14 rugby renewal. His message was that true long-term partners do not act opportunistically, grab short-term advantage, at the expense of old friends and to the benefit of new and unproven friends. And if they do, they should not be surprised that the scorned long-term partner will not quickly forgive and forget.

Historical echoes in the UK

Mark Twain said that history does not repeat itself, but it often rhymes, and a curious parallel to this French story played out in the UK, also featuring football and rugby, but with their positions reversed.

Sky started broadcasting top-flight English domestic club rugby in 1995, the first time such matches had been seen on television. Sky remained committed to club rugby and, in 2003, stepped up to add the Heineken Cup (as was) European rugby rights. I was an internal advocate of this move at the time.

All was well with the partnership until the arrival of Setanta. Having picked up two packs of PL rights in 2006, Setanta was looking for more rights to expand their portfolio. They had grabbed US PGA golf and SPL rights and, in late 2008, came hunting for club rugby. Sky was reeling under the onslaught of elevated bids for an array of sports rights and English club rugby was the latest contract that Sky felt it could not defend, at least not in its entirety. Premiership Rugby ended up awarding a premium pack of 43 matches (including the play-off finals) to Setanta, with Sky reduced to a supporting role with a smaller 26 game pack (and no final).

Premiership Rugby was delighted – their broadcast revenue had jumped by 45% to ￡54m pa – but their delight would be short-lived, and this figure would prove to be the high-water mark, not seen again in the following 16 years.

Sky, from this point on, having been humbled by its longstanding partner, started to lose interest in English club rugby and turned its attention elsewhere. Six months later in mid-2009, Setanta was on its way to administration and ESPN, the replacement PL broadcaster, stepped in for the Setanta slice of club rugby. Three years later they too were gone, replaced by BT (now TNT), at which point Sky dropped out completely. Sky stuck with the European competition for a while longer, retreating to a position of sharing with a buoyant BT Sports (announced 2014) but soon dropped out completely.

Sky felt it was treated poorly by Premiership Rugby in the mid-2000s, stepped away and has never been back for another look. Attention turned to other possibilities, including Formula One, as well as greater investment in original entertainment content.

Today, Premiership Rugby is still with TNT, but the competitive intensity for these rights has evaporated and the recent two-year renewal, to 2026, was for a rumoured c￡35m pa. This remains well below the ￡54m high water mark of 2008 – a poor performance over 16 years. It might even sit below the pre-2008 deal, given that the 2008 deal was touted as a 45% uplift at the time.

A similar scenario has played out in the UK for Champions League football rights. Sky first became involved as a broadcaster in 2003 and remained a consistent partner for UEFA for four cycles, always paired with a FTA channel (ITV or BBC), because UEFA insisted on at least one game per week remaining on terrestrial TV.

It all went wrong for Sky in 2015 when, in the midst of renewal discussions, which Sky thought were ongoing, UEFA publicly announced it had agreed a record-breaking ￡300m pa exclusive deal (no terrestrial partner) with BT Sport.

Sky was shell-shocked, but especially disappointed because, it was claimed, Sky had not been afforded a chance to match or beat the offer made by BT. Worse, Sky had previously enquired of UEFA, on several occasions, whether an all-pay TV bid would be welcome, but was always told that this was simply not possible, because the free window was sacrosanct, because the UEFA sponsors demanded the audience reach.

All of which left Sky was especially disappointed that UEFA now abandoned its long-held principle and agreed an all-pay TV deal with BT Sport, a channel with much reduced reach compared to Sky Sports. So much for four cycles of loyalty.

What has happened since? To be fair, no one would argue that UEFA has suffered the ignominy or decline experienced by Premiership Rugby, with UEFA broadcast revenues from the UK still above the 2015 level. But despite regular speculation, Sky has not returned to Champions League rights in three further auctions. And BT/TNT’s enthusiasm has cooled somewhat, now happy to step back and make room for a game per week on Amazon. The competitive intensity is not what it was.

An emotional response …?

No one likes to lose, and sports broadcasters are no exception. But is there more to it, are sports broadcasters especially sensitive souls, more inclined than most to bear a grudge?

Perhaps, but my experience is that if they are outbid by a competitor in a fair fight, they will accept the outcome and, in principle, remain willing to come back and try again next time (although see below for an important caveat). That said, there are three issues that are almost guaranteed to stir broadcaster emotions.

• First, sports broadcasters think their long-term commitment earns them a “last matching right” – a chance to match or beat a competitive offer – whether or not this is written into the contract. They especially don’t appreciate it when a rights holder plays along when a competing bidder says their offer must be accepted now and would lapse (and they would publicly withdraw) if the incumbent broadcaster is offered the chance to match.
• Second, longstanding broadcast partners don’t like losing out to the latest, fly-by-night entrant, bidding money they don’t have off the back of a naive spreadsheet that is full of holes. This puts the incumbent in an invidious position, either pay over the odds to avoid disruption, or step aside and wait for the new entrant to go bust. This narrative has played out many times, with the jilted longstanding partner called upon to pick up the pieces and get the sport back on track. Yet there seems to be no end to the queue of wealthy but na?ve investors dazzled by the mix of sport and TV, and no end of rights owners willing to believe
• Third, more generally, sports broadcasters who have been loyal partners, who think they have contributed to the growth and development of a sport, with years of promotion and support programming, don’t like being taken for a sap. Just like the rest of us, they don’t like their loyalty being taken advantage of, taken for granted and abused. They understand that money talks, but they hope there might room for a bit of reciprocity so, when things get tough, their previous years of loyalty might count for something.

A more rational explanation?

Beyond these three primary emotional triggers, however, there are also perfectly rational reasons why a spurned broadcaster might never look back.

Sometimes the dropped broadcaster discovers that the sports right in question was not nearly as important as they had thought, or at least not as important as it had been a few cycles back, perhaps 8 or 12 or 16 years ago, when they first got involved.

They have been the broadcaster for many cycles, they believed it was a key part of their offering, central to customer acquisition and churn management. But when suddenly it is taken away, the broadcaster is pleasantly surprised to find that the world does not end, customers don’t leave in droves and new prospects continue to sign up.

If so, when the cycle turns and the rights come up for renewal again, it will often be quite unattractive to get involved again, even on a dispassionate analysis:

• they have already processed and moved on from the public embarrassment of the setback of losing the rights
• having spent months explaining to the world that this loss of rights was not a big deal, they believe it, and would find it hard to explain why they need to get involved again
• the money saved has been redeployed elsewhere, in contracts that are still live and working well
• the customer losses weren’t as great as feared, so the gains from re-acquiring will surely also be modest?
• and to access those modest gains, they would need to incur acquisition costs for those customers for a second time
• so the “opportunity” to pay for the rights again now looks like a major fixed cost commitment – a certain downside – with limited and uncertain upside

All in all, even on rational grounds, it is often hard to go back.

A message for rights owners?

It is, of course, perfectly understandable that rights owners might ignore these cautionary tales. If you have been paid $100 for years and someone suddenly offers you $150, what else are you supposed to do?

Perhaps they think they have been underpaid for years, that this has not been a partnership at all, rather that they have long been oppressed and taken advantage of. Perhaps they have seen other rights owners enjoy larger up-lifts while they have languished, a victim of a lack of proper competition, not paid their full value while a broadcaster grows rich.

Now, at last, someone has recognised the real value of their rights. They don’t think the incumbent deserves a last matching right at all – if they were willing to pay $150, they should have bid that number a bit earlier.

Perhaps the new entrant broadcaster will be able to get through the cycle and pay their way, perhaps their new business model has indeed uncovered value not previously tapped, through use of “unbundling”, “digital”, “streaming” or some other new, magical and mysterious elixir.

And even if not, even if they fall over, a new higher bar will have been set for what their rights are worth. It’s a chance worth taking, for the good of the sport, and they would be criticised if they did anything else.

Fair enough, and I can see the temptation, but a few questions to consider before ditching the long-standing incumbent broadcast partner. Are they the type of partner to bear a grudge and take their revenge for many, many years? How financially secure is the new bidder, how solid is their business plan really, have they really discovered a previously untapped source of value? And how exposed will the rights owner be if the new partner falls over and the old incumbent declines to return, whether for emotional or entirely rational reasons?

Back to Canal Plus

Meanwhile, we await news of the sale of Ligue 1 rights and wonder if there is any scenario in which Canal+ would get involved again.

Things look tough for the LRP. All the signs are that Canal+ has moved on. They have learned to live with being the minority Ligue 1 partner – with only 2 games per week versus 8 elsewhere – and the sky has not fallen in. From here, it is a small further hop to living without Ligue 1 altogether.

Meanwhile, they have invested in alternative top-level football (in the form of the Champions League and the EPL) and customers seem to be happy. Going back from here would be tough.

And given Maxime Saada’s comments around the Top 14 renewal, the prospects appear even worse. The LRP managed to hit all three of the primary emotional triggers listed above and the evidence suggests that Canal+ is not in the mood to forgive and forget quickly. Mbappe heading to Madrid for next season surely does not help.

In the last few days, the LRP has taken to threatening that it will launch a DTC service if the broadcasters do not step up and meet their demands. This is a bit like threatening that if you don’t get your way, you will chop off your own arm. To some degree, I hope they do it. Not because I think standalone DTC will work, but after all the speculation all around the world, it would be helpful for some major rights owner to volunteer to take the plunge and give standalone DTC a go, so we all can learn just how bad the experience is.