Amazon Acquires Exclusive EPL Rights, First Non-Traditional Broadcaster to Carry League Games

JohnWallStreet

Amazon (AMZN) has acquired the exclusive rights to broadcast 20 English Premier League matches per season in the U.K., becoming the first non-traditional broadcaster to carry league games. The three-year pact, set to begin in 2019-2020, represents the e-commerce giant’s most significant live sports programming acquisition to date. AMZN will live-stream games on its digital Prime video service at no additional charge to Prime members (costs $119/year). Financial terms of the deal were not disclosed but BT Sport is reportedly paying $40 million/year for a comparable package. Late Thursday, with the league’s broadcast rights through the next cycle sold, Executive Chairman Richard Scudamore announced he would be resigning before the end of the calendar year. A successor has yet to be named.

Howie Long-Short: It’s important to simultaneously recognize the significance of this deal (i.e. a FAANG company lands exclusive rights!), while understanding that 90% of the broadcast rights available to media companies within this round were sold to traditional TV providers (i.e. linear television isn’t going anywhere, anytime soon). SKYAY will pay $1.655 billion/season for its four packages (128 games/season), a 14% discount on the expiring deal; while BT got the 5th package (32 games/season) for 8% less ($409.3 million/season) than it’s currently paying for the rights. BT picked up an additional 20 games/season at a discount rate ($40 million/season), earlier this week.

EPL clubs decided to sell the last two rights bundles (Amazon’s and the BT deal signed this week) at a cut-rate price after each failed to meet reserve prices in February’s auction and having concluding that Executive Chairman Richard Scudamore overestimated the interest from non-traditional broadcasters after the first five packages were sold to the old guard.

As for AMZN, the company posted its most profitable quarter ever in Q1 ’18. It grew revenue +43% to $35.7 billion, while net income rose 121% to $1.6 billion. Cloud computing (+49% YoY to $5.44 billion), subscription services (+60% YoY to $3.1 billion) and ad revenue (+139% YoY to $2.03 billion) all contributed to the record quarter. AMZN shares are up 7% since May 22nd and climbed past $1,700 for the first time this week, closing on Thursday at $1,689.30.

Fan Marino: The EPL’s 20 clubs currently split international broadcast revenues evenly, but top clubs like Manchester City, Manchester United and Liverpool have been lobbying for a larger percentage; arguing it’s their presence within that attracts the foreign viewer. On Thursday, they got their wish – the league’s clubs decided that any future increases in broadcast revenues would be distributed according to final league position (from ’19-’20 season forward). It should be noted that the new formula ensures the league’s top club receives no more than 1.8x the amount of the lowest-earning club.

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