Al Jazeera secures World Cup rights

Keach Hagey

• Last Updated: November 24. 2009 11:48PM UAE / November 24. 2009 7:48PM GMT

The landmark deal, which makes Al Jazeera the dominant regional player in sports broadcasting, is the second consolidation between Middle East pay-TV providers this year after the merger between Orbit and Showtime in July. Sipiwe Sibeko / Reuters

Al Jazeera Sports has bought the rights to Arab Radio and Television’s (ART) sports content, including next year’s FIFA World Cup, in a deal estimated to be worth more than US$1 billion (Dh3.67bn).

The landmark deal, which makes Al Jazeera the dominant regional player in sports broadcasting, is the second consolidation between Middle East pay-TV providers this year after the merger between Orbit and Showtime in July.

The changed pay-TV landscape after that merger combined with pressures from the recession helped create the conditions for the sale, said Nawaf Tamimi, the ART head of public relations.

“It’s a good time to sell, to be honest,” Mr Tamimi said. “The competition has changed with new, strong players coming into the pay-TV market. You have the recession, which is a globally difficult time economically for everybody. And you have this content, the World Cup, which is very valuable, and a party who are interested to buy.”
Al Jazeera Sports declined to comment on the deal.

While the price of the sale was not disclosed, unidentified sources close to the deal estimate that it was more than $1bn, noting that ART was looking to recoup the costs of sports rights it had bought since it was founded in 1993. ART was the largest sports rights holder in the region until the sale, with a portfolio that included the FIFA World Cups for next year and 2014, the African Cup of Nationals from next year to 2016, and an array of league championships throughout the region, including the Saudi League and national team matches.

Those rights will shift to Al Jazeera, with the exception of the Saudi League. ART will continue to act as host broadcaster on its Sport 7 channel jointly with Al Jazeera channels until the end of next season. ART Sport 7 will be available on the Al Jazeera Sport Channel bundle.

ART is owned by Sheikh Saleh Kamel, the Saudi billionaire, and the contract for league TV right requires them to go to a Saudi company, Mr Tamimi said.

The deal represents a significant shift of ART’s business model out of the high-stakes rights game and towards becoming a distributor of content for multiple broadcasters.
“Our business model is going to move toward the next stage where we will be a kind of platform, more than channels,” Mr Tamimi said. “As a platform, we can provide our subscribers other channels through our receiver.”

Although the official announcement said only that ART will distribute Al Jazeera Sport Channels +1 to +8 “on a non-exclusive basis”, meaning Al Jazeera will still have the option of selling its own smart cards, industry observers believe it makes sense for Al Jazeera to leave the distribution game to ART as selling smart cards has never been Al Jazeera’s core business.

In contrast, ART recently made a major investment in new encryption technology for its smart cards, has an extensive network of offices throughout the region to service them, and has announced plans to flood the market with set-top boxes in time for the World Cup.

Reaction was mixed about whether the deal would reduce prices for consumers. On one hand, ART and Al Jazeera joining forces would eliminate rights holders’ ability to pit them against each other in bidding wars, creating savings that could conceivably be passed on to the consumer.

On the other, concentrating so much sports broadcasting power in one place gives Al Jazeera a stronger position when setting prices for its packages.

Mr Tamimi said ART was planning to offer less expensive packages in the future. Currently, the basic family package on ART, which includes 24 channels of sports and entertainment, costs about $16 a month depending on the territory.

Looking ahead, the company plans to offer basic packages, without World Cup access, for about $150 a year, he said. The price of packages with the World Cup has yet to be decided.

ART Sport and Al Jazeera Sport subscribers will be able to access sports channels from each other for December. ART Sport channels 1 to 6 will cease transmission at the end of this year, although ART subscribers will be able to continue to watch the same matches on Al Jazeera Sport channels on the ART bundle.

khagey@thenational.ae