First published in the Daily Maverick 168 weekly newspaper.

In the early 1990s, newly formed British television company BSkyB needed a way to stem its growing losses. It considered several options, including broadcasting pornography as a way of boosting income.

But, after a short period of research, it kept coming back to one offering that it believed would save the company and swell its coffers – broadcasting live sport. In BSkyB’s case, the sport it targeted was football and, to cut a long story short, it found willing partners in England’s established clubs. But BSkyB had to spend money to make money.

After years of pitiful income from public broadcaster the BBC, English clubs recognised they held significant value that the public broadcaster simply wasn’t offering. Enter BSkyB and ITV. Both companies wanted to buy the rights to the first division, as it was known then, offering the clubs a way to maximise their earning potential through the exclusive sale of broadcast rights.

Ultimately BSkyB won the bidding war, and in 1992 the English Premier League (EPL) was formed. The initial fee BSkyB paid was £304-million. To recoup the costs of that outlay, it started a dedicated subscription service. Fans who wanted to watch Manchester United and Liverpool, for instance, had to become BSkyB customers.

The rest is history. Effectively, what the deal did was bundle the value of England’s leading clubs into one package, which they exclusively sold to one broadcast partner. BSkyB was then able to market the “package” and build an entire channel and division around increasing its value and reach.

The EPL is now the richest league in the world. The last five-year broadcast cycle from 2015 to 2020 was worth £5.1-billion. Players earn obscene amounts of money and clubs, even in these Covid-19 times, are super-rich. That doesn’t mean it hasn’t come with some problems, but from a purely business perspective, BSkyB (which later became Sky Sports) and teams in the EPL benefited massively.

It does cost fans money, but the package is not just a few cameras showing the game. The money those broadcast rights brought to the game has meant improved stadiums, multiple cameras, analysis and engagement on many other platforms. The 90 minutes of an EPL game are only one part of the massive media offering these days.

In SA, on a smaller scale, the way the EPL packaged its “product” is how the Premier Soccer League (PSL) and the South African Rugby Union (Saru) have managed to put together multibillion-rand broadcast deals.

In the South African landscape, pay TV channel SuperSport, a subsidiary of MultiChoice, has been the equivalent of BSkyB. There is no doubt that SuperSport has a monopoly on sports broadcasting in South Africa, just as there is no doubt that SuperSport has delivered billions of rands to sporting bodies in return.

In the 1990s, SuperSport realised that being aggressive in the pursuit of sports broadcast rights was the way of the future. At that time the SABC was still in a position to compete for rights, but it either didn’t – or couldn’t – match SuperSport. The pay channel knew it had to spend money to make money. Sound familiar?

Over the past two years the Independent Communications Authority of South Africa (Icasa) has tried to put a stop to this monopoly. Icasa wants football and rugby in particular to hand over its rights to the likes of the bankrupt SABC and less well-heeled e.tv so that those sports are broadcast free to air.

On the face of it, it’s a noble pursuit, wanting to ensure all South Africans can see their favourite teams on state-owned TV channels. But Icasa’s way of reaching this goal by threatening sporting bodies such as the PSL and Saru is flawed and essentially folly.

This toothpaste can’t be put back in the tube. The sale of sporting broadcast rights is a global business and ensures financial stability for entire industries because the deals are generally done on five-year cycles.

Broadcast rights are also not a closed shop. If the value of the PSL is R2-billion over five years, there is nothing stopping the SABC or e.tv entering into a bidding war against SuperSport for those rights. Sporting bodies would actually prefer to have a fight for their product because it would drive the price up.

But the SABC has been run into the ground after decades of mismanagement. The organisation can barely pay for paper clips at its Auckland Park headquarters, so it simply can’t bid for sporting rights.

e.tv seems to be profitable, but it also doesn’t want to bid for the market value of these sporting products. It has taken the approach of backing Icasa’s bid to liberate sports broadcasting from SuperSport and disperse it widely. If that happens, professional sports as we know them will quickly wither and die.

Icasa’s solution appears to be the following: given that SABC and e.tv cannot meet the market value of these sporting rights, SuperSport should still purchase them at the market value and then “sell” them at cut prices to other players in the market.

Icasa also wants to reduce the broadcast rights terms to a maximum of three years and for content providers to unbundle their rights so that multiple broadcast parties can obtain a piece of the pie.

Both the PSL and Saru have dismissed these notions because the key component of any broadcast rights deal is exclusivity. If a sporting body removes exclusivity from its broadcast package, the value plummets.

PSL chairman Irvin Khoza said his organisation would lose 80% of its revenue if exclusivity was removed. Saru conservatively put the number at 50% but asked the question: “Would the unbundling and rights splitting make up the other 50%?” There is no evidence that that would be the case.

In European rugby, for instance, there is a deal called Project Light, where all the competitions – Six Nations, Pro14, Premier League – have bundled their commercial rights into one broadcast pool to sell to one buyer. They are centralising their rights to make them more valuable.

But Icasa appears to think that splitting rights, and virtually giving them away, is the future. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.