TV giant Granada has staked its claim on next generation sports coverage through deals with the UK's leading football teams. Russell Clarke evaluates its Web and broadband strategy.
GRANADA
IT'S EASY TO FORGET THAT OTHER media companies aside from BSkyB are scurrying away and amassing their stakes in sports rights. Granada Media, after quietly forming partnerships with Liverpool FC, Arsenal FC and Manchester United TV, now has a share in what are arguably England's three biggest footballing brands.
If you're a fully paid-up subscriber to the content is king principle, Granada's football partnerships promise to deliver truly global audiences. Just as live Premier League football sold Rupert Murdoch's satellite dishes and live Champions League football sold ONdigital's set-top boxes, Granada believes that the provision of full-length -- if delayed -- streamed matches over the club's respective Web sites will drive audiences.
Granada Media is tapping into the English Premier League's move towards full dissemination of its digital intellectual sports property rights. This is likely to benefit its member clubs and their respective sites and Web partners in the short term as, for the first time, these clubs and sports-content providers are given audio. visual access to their own home matches.
The live rights will remain on TV with BSkyB, which paid a world-record fee of [pound]1.11bn for a three-year contract and highlights will switch to ITV for [pound]183m for the same period. However from the beginning of the 2001/02 season, each Premiership club will be permitted to screen their own home matches between 24 and 72 hours after a match ends. With Manchester United (through MUTV) the only Premiership club with its own full TV channel, most clubs will initially seek to stream this new audiovisual content through their respective Web sites.
During the first quarter of 2000, Granada Media acquired a 9.9% stake in Liverpool Football Club at a cost of [pound]22m which will allow the media company to broadcast highlights of the club's matches on the Internet, mobile devices and digital TV. The service, to be called Liverpool Broadband, will initially be free of charge for online users although Granada does envisage subscriptions, particularly when mass broadband improves audiovisual quality. The service is also to include full t-commerce, e-commerce and online betting.
In a similar move, Granada Media took a 5% stake in Arsenal in the third quarter of 2000, in the form of 2,947 new ordinary shares, at a cost of [pound]27m. Soon after taking this stake in Arsenal, Granada paid a further [Pound]20m to fund an Arsenal broadband venture. As a result, Granada became the club's commercial services and media agent and, more interestingly, its new media agent. This saw the launch of a new joint venture, Arsenal Football Club Broadband (AFC Broadband), which aims to become a global portal through which to exploit the club's new media rights.
The deal gives Granada the rights to delayed online coverage of Premier League matches from August 2001, as well as UEFA Cup matches and local and regional radio rights when they next become available. AFC Broadband will be permitted to broadcast the full 90 minutes of Arsenal's Premier League home games from midnight on Sunday, following a Saturday afternoon match, as well as the full midweek matches from midnight the same night. This is all providing that BSkyB hasn't chosen the club for that week's featured live TV matches. Although full details have yet to be disclosed, Granada isn't likely to initially charge fans for this service. Once a loyal following has been built up and fans are accessing broadband quality pictures, subscriptions/pay-per-view charges may apply. The site will also offer an archive of classic Arsenal matches, together with reserve, junior and Arsenal women's matches and full live audio commentary of first-team games. The site will also feature online gambling and merchandising facili ties.
"We're acutely aware that the delayed action rights given to us from the beginning of next season are very valuable," says Simon Shaps, managing director of Granada Broadband. "This is unique content which we believe will significantly drive traffic. We're in the final stages of deciding exactly how to utilise this content and exactly which revenue model to apply to it."
However, Shaps says the changes made to the site will be incremental rather than big bang. The aim is to add content richness over time -- in the same manner that penetration and density of bandwidth and capacity will evolve. "We want to build partnerships with incredibly strong brands to develop broadband services," he adds. "The likes of Arsenal and Liverpool with their very passionate -- and global -- fan bases are ideal."
Indeed, the respective sites' global appeal is fundamental to their success. The Arsenal site already attracts 40% of its 4m visitors every month from overseas, while Liverpool FC estimates that it now has l0m overseas fans. The long-term goal for the respective sites is to reach a number of key international markets including Singapore, Hong Kong, Malaysia and Scandinavia.
This global interest is the main reason why many major European clubs play their pre-season games in markets such as the Far East. The arsenal.co.uk site was even re-launched as arsenal.com earlier this year in a bid to target fans at home and abroad in America, Scandinavia and Asia specifically.
The success of the Liverpool FC Broadband and AFC Broadband projects depends mainly on two factors. Firstly, both clubs need to consistently qualify and progress in big European tournaments, to maintain and build their international fan bases. The second crucial factor to success is the global take-up of broadband technology (see first table).
Although the long-term goal of the AFC Broadband and Liverpool Broad-band projects is to develop a wide range of entertainment, e-commerce and personalised services, the sites will initially enhance existing revenue streams by providing different distribution outlets for ticketing and replica kit sales. However, it's hoped that the value-added service of delayed match coverage will boost overseas users visiting the official team sites. Because of the Internet's global nature the clubs will be able to cash in on this support directly for the first time, through advertising and e-commerce revenues and possibly subscriptions. Ultimately, the sites may feature live action instead of delayed full-match coverage. However for this to happen, the Premier League clubs would need to break away or wrestle back intellectual property rights from the Premier League.
In the long-term, it's expected that the emergence of broadband capability will effectively do away with the need to launch a Manchester Utd-style pay-TV channel. As the Internet and TV converge, fans will be more likely to sit and watch matches, and potentially pay for them, on a pay-per match basis, or via a TV season ticket. With the dedicated Premier League fan only given access to a set number of live matches featuring their favourite club each season -- even if they choose to subscribe to all available pay-channels--there is a huge untapped market for streaming matches over club sites. From next season, Granada Media will offer Liverpool and Arsenal fans the first available chance to watch most of their club's home matches in full via the broadband sites.
GLOBAL STREAMING MEDIA FORECASTS 2001 2002 2003 Web pages offering streams 790 950 1,104 Video streams served (m) 506.2 733.9 1,064.2 Broadband video streams (m) 121.9 [*] 212.8 361.8 Percent of broadband video stream 24 29 34 Weekly hours live Web-casts 95 128 167 Percentage Web traffic streaming [**] 7 9 11 2004 Web pages offering streams 1,221 Video streams served (m) 1,543.1 Broadband video streams (m) 601.8 Percent of broadband video stream 39 Weekly hours live Web-casts 217 Percentage Web traffic streaming [**] 13 Source: Informa Media Group (*.)Digital Broadcast and Programming Webcast Track (**.)audio and video
MUTV
GRANADA FINANCES, YEAR ENDING SEPTEMBER 2000 2000 total, pre Digital TV digitalTV and and online online ([pound]m) 2000 ([pound]m) Turnover 1,166 53 Group turnover 1,087 - Operating costs 808 176 Operating profit 253 -176 Profit (gross) 260 26 Pre-tax profits 301 12 Profit after tax 207 54 Adjusted per share 13.8p - 2000 total after 1999 total, pre digital TV and digital TV and online ([pound]m) online ([pound]m) Turnover 1,219 998 Group turnover 1,087 998 Operating costs 984 732 Operating profit 77 251 Profit (gross) 286 248 Pre-tax profits 313 296 Profit after tax 261 206 Adjusted per share 17.3p 12.7p
OTHER GRANADA SPORTS VENTURES
Granada has an equal 33% stake in Manchester United's TV channel, MUTV together with the club itself and BSkyB. MUTV is available on Sky and NTL digital between 17.00 and 23.00 daily. It also recently signed an agreement with Telewest, making the service available on the group's Active Digital network from 1st April. However, the station revealed losses of more than [pound]1m in the club's year-end figures to July 2000. Although no figures have been released for subscription levels, the club stated that subscriptions "have doubled" during 2000. The availability of first team action on the channel between 24 and 72 hours after matches end, from August 2001, should boost subscriptions further.
ITV-F1.CO.UK
ITV-F1 is amongst the market leaders for Formula 1 news and features on the Web and is the official tie-in site for ITV's Formula 1 TV coverage. A primary aim is to complement the TV broadcasts with in-depth news and analysis -- a service that will become more integrated with the roll-out of Internet TV. The site first went live in 1998 and has since undergone a considerable evolution. It has been subject to several redesigns to improve its look while content and features have been frequently altered. The site has around 500,000 average monthly unique users.
ITV-FOOTBALL.CO.UK.
ITV's powerful position in the football TV rights war may well boost traffic to its fledgling football site. From next season, TV will own exclusive live rights to the UEFA Champions' League (along with ONdigital) Premier League highlights (ending the reign of the BBC's Match of the Day) and live Worthington's Cup and play-off action. As Internet and TV converge, the ITV-football site will increasingly be linked to live action. In March 2001, ITV's interactive services were boosted by the launch of Text+, a new 24-hour information service carrying coverage of the Champions' League. The text service retains a picture in the bottom-left corner of the screen, allowing viewers to see European matches while accessing live score updates, statistics and group tables. Football fans are also offered 'spot the ball', a shoot-out game and a football quiz.
COMPANY HISTORY
* July 1999: Granada acquires a 9.9% stake in Liverpool FC for [pound]22m.
* May 2000: Granada and Compass merge.
Creation of Granada Broadband to focus on pay-TV and Internet ventures.
* July 2000: Granada Media floats 20% of the company.
* September 2000: Granada takes a 5% stake in Arsenal Football Club.
* October 2000: Granada takes 40% stake in joint health and beauty venture Wellbeing with Boots.
* February 2001: Granada demerges, separating its media and hospitality businesses.
Completes its acquisition of the TV assets of United News and Media
* April 2001: Granada and Carlton announce the alignment of ITV and ONDigital. ONDigital to be renamed ITV Digital.
ONDIGITAL - SPORT ENTERS THE DIGITAL AGE
In a 50:50 venture with Carlton Communications, Granada launched ONdigital, the world's first digital terrestrial operator in November 1998. Subscription levels broke the 1m barrier to 1.02m for the end of 2000 -- a figure up 83% from 1999. The service offers users a variety of pay and free-to-air TV channels and a number of interactive services and pay-per-view movies.
However, many analysts believe that Ondigital's subscriptions have risen so dramatically because of the group's capture of live and exclusive rights (together with ITV) to the glamourous and popular UEFA Champions' League.
In fact, ONdigital claims that its viewers have access to more sport than through any other platform and is currently building a premium sports channel to accommodate the extravaganza. Together with its Champions' League and Worthington Cup offerings (which, incidentally is "free" to all subscribers who take the basic package) ONdigital has also won exclusive rights to broadcast the Football League's live-pay, pay-per-view and tree-to-air matches with ITV from next season. The operator also exclusively offers the Men's ATP Tennis Masters and subscriptions to British Eurosport and Sky Sports 1, 2 and 3.
ONdigital is also offering 'all the benefits of having the world in you own front room' through its ON net service. The Internet-through-TV service offers walled-garden and unlimited Web access through a 56k modem the size of a paperback book, on top of the ONdigital set-top box. The service also offers ONmail, through a cordless keyboard which lets the user send video stills and audio clips to any email address.
However, ONnet has been largely criticised because insiders don't see how it fits into Granada's overall strategy as it clashes directly with the group's beleaguered PowerChannel service. PowerChannel was billed as offering free Internet access through the TV for people without personal computers. PowerChannel users would have free TV-Internet access in return for filling in a questionnaire every month, which could then be sold onto data-capture companies. However, PowerChannel, in which Granada Media has a 23% [pound]13.5m) stake, has seen its launch delayed four times in the past
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