Singtel Optus Bets Big on Rights to Broadcast EPL in Australia

Australia's second largest telecommunications giant, Singtel Optus Pty Limited, has staked as much as AU$63 million per season or a total of AU$189 million in snatching the broadcast rights to air the English Premier League (EPL) in Australia for the next three years. Optus Chief Executive Officer Allen Lew came out with the announcement last Friday, calling the move a significant step in their strategy to become a mobile-driven multimedia company.

Local news reports have it that Optus had outbidded current broadcast rights holder Fox Sports, who initially placed AU$35 million as bid, but later upped the price to AU$50 million in the second bidding round. The reports quoted the statement of Fox Sports executives that they made a bid based on the maximum worth of the broadcast rights.
Yet Optus CEO Lew told Fairfax that sport content is iconic to Australian consumers, posing as a major plank in their content strategy. He added that they have witnessed how other providers harnessed the EPL to create an edge in bringing their standard carriage service, and that the company as a whole believes that they can attain the same objectives via the new deal.

Mr. Lew remarked that clinching the EPL broadcast rights gives credibility to their earlier pronouncements of taking steps to differentiate the Optus brand from other telecom networks through the content delivered. He hinted that the plan is to give customers access to media content through a diverse range of platforms, including big screen televisions and smartphone apps. That being the case, he stated further that it denotes building an Optus brand of mobile phone applications. The company is also negotiating a streaming partnership deal with Netflix.

Still, observers consider the Optus move a gamble. Justin Diddams, a Citi Research Analyst commented that it is still unclear just how Optus plans to monetise the EPL deal. He opines that Mr. Lew's company still has to work harder in order to re-connect with customers, adding that for a number of years, Optus has encountered difficulties in increasing customer base for its broadband/mobile business. By Mr. Diddam's estimate, Optus would have to add around 80,000 customers just to break-even. Nonetheless, he calculates that at AU$80 average earnings per user and a 75 percent drop-thru rate, such an undertaking seems achievable.

The Optus CEO though is optimistic, dropping further hints that the company is working on other deals. The buzz is that Optus is likewise bidding fiercely in order to wrest the streaming rights for the National Rugby League NRL), from closest Australian competitor, Telstra.

Apparently, the Telstra contract is up for re-negotiations and Optus already has a team in place to convey their interest in an NRL deal. In light of Mr. Lew's comments that the EPL is still not the largest because there are other deals he has not negotiated yet, it is safe to surmise that Singtel's Optus' bid for the NRL digital rights would be greater than the AU$63 million deal struck with the EPL.

Actually, Mr. Lew had stated previously that the multi-million streaming partnership agreement signed with Cricket Australia last October 2015 is only the beginning of other broadcast rights to come. At that time, he refrained from mentioning the other sport codes under consideration. He simply mentioned that their goal is to offer live streaming of sport matches and entice customers with free season passes. The deals are transformational and in line with the telecom company's plans to alter Australian consumers' perception of Optus, as a mere provider of basic telecom utility services.