Optus's win of the Australian broadcasting rights to the English Premier League Football (EPL) is yet another strike into the heart of commercial television broadcasting.
The telecoms and broadband provider was said to have paid US$45 million for the rights for three years starting from 2016-2017 – more than double the amount Fox Sports is paying now in Australian dollars. Fox Sports broadcasts the EPL primarily via Foxtel, Australia's monopoly pay TV network, jointly owned by Fox Sports owner News Corp (ASX: NWS) and Optus rival Telstra Corporation Ltd (ASX: TLS).
Interestingly, Optus has yet to decide how Australian viewers are going to be able to watch the EPL matches, given the telco doesn't have any media assets of its own. Media reports suggest the telco is in discussions with online subscription service FetchTV.
Optus reportedly has designs on becoming a serious sports media rights owner in Australia – in an effort to woo customers away from rivals like Telstra and Vodafone.
While EPL matches aren't broadcast on any of the three commercial TV networks, Ten Network Holdings Limited (ASX: TEN), Nine Entertainment Co Holdings Ltd (ASX: NEC) or Seven West Media Ltd (ASX: SWM), what Optus' move does show is that more players, particularly those with fixed or mobile broadband infrastructure are moving into the entertainment business, particularly sport. That's a huge threat for the commercial TV networks.
While there are anti-syphoning rules in Australia that give the free-to-air (FTA) networks the right to show major sports events on TV, increasingly it's money that talks.
For more than a few years now, a number of people have suggested that three Australian commercial (FTA) TV networks in Australia is one too many, and possibly three too many. I've also noted that apart from news and sports, FTA offers very little in the way of consistently compelling TV, especially when you consider streaming media providers like Netflix and HBO are revolutionising what we watch, with series like House of Cards and Game of Thrones. Annual repeats of cooking, renovation and talent quest shows only work for so long before viewers have had enough.
Now even news is under threat, with most social media savvy people getting their news from Twitter, Facebook and other sources online. Netflix CEO Reed Hastings has also suggested that the evening news is 'bleeding to death'.
Advertising is also following consumers, who are increasingly switching off from free-to-air TV. Older viewers, perhaps more accustomed to commercial TV are still avid viewers, but many reports suggest teenagers and younger adult viewers watch virtually no free-to-air TV. As they get older, free-to-air TV audiences are likely to fall even further.
Foolish takeaway
Commercial TV is a sector under siege, much like newspapers were a decade or so ago. While there might be some value in the commercial broadcaster's TV licences, it's unlikely to be much.
