A prominent analyst has a theory on why tech's heavy hitters did not compete in a bidding war for broadcast streaming rights to the English Premier League and NFL.
Brian Nowak, who follows media for Morgan Stanley, blames what he calls the surprising turn of events on fragmented audiences and the impact of "over the top" (streaming video) competition on incumbent broadcasters.
"It is likely that fragmentation has caught up and is now impacting even the most popular sports," he writes, noting that 21st Century Fox (FOX) spent a modest 33% more on Thursday Night Football. "Both the NFL and EPL have seen surprisingly weak viewership trends the last few seasons."
Sky and BT Sport this month paid a combined 4.5 billion pounds ($6.3 billion) for TV rights in the U.K. to matches for the 2019-22 seasons, about 90% of the current deal they share. Two remaining packages, presumably for the Internet, hasn't exactly produced the slugfest between Amazon.com (AMZN), Alphabet's (GOOGL) YouTube, and Facebook (FB) that some had predicted.
But don't count Big Tech out of the game just yet.
"Outside of Netflix (NFLX) and to a lesser extent Amazon, no tech firm has been willing to sign up to significant long-term content obligations of any kind," Nowak writes. "Second, rights owners are typically fairly risk averse and prefer the status quo-suggesting tech will have to significantly outbid incumbent broadcasters to win rights.
"Finally, advertising alone will not cover these rights fees, so how will tech platforms cover remaining losses if in fact that is the goal?"
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