Big battle over Italian TV rights

When Italy’s cash-strapped soccer clubs meet today to prepare for a new deal on broadcast rights, their deliberations will be influenced by the knowledge that Italian football is in a dismal state and viewers are switching off.

A farcical match in the third division this month, which saw a local derby near Naples abandoned after players were threatened by fans and faked injury to avoid playing, underlined the grim climate in the Italian game, beset for years by match-fixing scandals and stadium violence.

When Italy’s cash-strapped soccer clubs meet today to prepare for a new deal on broadcast rights, their deliberations will be influenced by the knowledge that Italian football is in a dismal state and viewers are switching off.

A farcical match in the third division this month, which saw a local derby near Naples abandoned after players were threatened by fans and faked injury to avoid playing, underlined the grim climate in the Italian game, beset for years by match-fixing scandals and stadium violence.

More seriously, from the broadcasters’ point of view, the game’s top level has fallen sharply since the glory days of the 1990s, when Serie A was a byword for footballing glamour and attracted the cream of the world’s playing talent.

Italy’s deep recession has hit spending on luxuries like television football subscriptions hard, but broadcasters have also been worried by a slide in matchday attendances and the now standard backdrop of empty seats in half-filled stadiums.

Swedish attacker Zlatan Ibrahimovic, perhaps the last genuine world class star to play in Italy, moved to Qatar-backed Paris Saint Germain in 2012, and though in 2010 Inter Milan won the UEFA Champions League, Italian clubs overall have slipped behind their rivals in Spain, Germany and England.

It is in this downbeat climate that the clubs are preparing to appoint an agent to negotiate next year with the television companies for a new deal for the rights to broadcast matches, which are shared between clubs and form well over half of their annual income. The choice of agent, expected at a meeting on Monday of Lega Calcio, the body that represents the clubs, will set the agenda for at least the next three seasons.

The company favoured to win, Swiss-based agency Infront, has held the contract since 2009 and is bidding to have it extended for another six years in the face of resistance from some of the clubs and from News Corp’s Italian unit Sky Italia.

Sky Italia has long been unhappy with a status quo, which it says holds back development of the game and favours its rival, Mediaset, owned by Silvio Berlusconi, the former prime minister and boss of Serie A club AC Milan. It has pushed hard for a re-negotiation of the contract, which, uniquely in Europe, awards television rights on the basis of delivery platform but which charges widely different prices to the two main broadcasters.

Sky pays 561 million euros for the right to broadcast 380 matches a year via satellite, while Mediaset pays only 268 million euros for 324 matches on digital terrestrial television, which used to have – but no longer has – a smaller geographical coverage than satellite.

Without the roughly 1 billion euros in television income, the clubs, which racked up combined operating losses of 160 million euros in the 2011/12 season, would be unable to keep going. But without the 4.4 million subscribers to soccer matches, Sky and Mediaset, the two pay-TV companies left after the failure of the fledgling Dahlia in 2011, would also struggle to keep their operations going. The problem is that the Italian market is not big enough to support two-pay TV operators.

Sky proposes breaking up the rights into packages on which different operators would be free to bid for exclusive rights, a model it says would open the sector up to more competition, increase subscribers and bring in more revenue.

But many of the clubs are suspicious that such a model would give too much power to one broadcaster, while Mediaset, which is slashing costs and investments to make up for falling advertising sales and is unable to match Sky Italia’s bidding power, fears being left only with unattractive packages.

The clubs are expected to back Infront’s offer, but only for three years, rather than the full six years it has sought, with several clubs still unhappy with the proposal. The battle has already split Lega Calcio into two blocs, with a 13-strong group around Milan and Mediaset lining up against Sky Italia and a smaller group of seven clubs led by Juventus that want to overhaul the system.

Big clubs such as Juventus, with its big fan base, playing history and ties to car giant Fiat, and Inter Milan, now owned by Indonesian tycoon Erick Thohir, play in a different financial league from smaller clubs such as tiny Hellas Verona or Udinese and already collect the lion’s share of TV revenues.

They have been particularly keen for an overhaul with more cash raised from international rights, which Juventus chairman Andrea Agnelli noted last month earned Italian clubs only a fraction of the sums raised by the English Premier League. For the moment, though, the betting is that the current arrangement will continue without the kind of revolution that would create new winners and losers among clubs desperately hanging on to their share of a shrinking pie.