TNT Sports losses reflect broader challenges for sports subscriptions
Losses at TNT Sports, the UK pay TV broadcasting joint-venture between Warner Bros Discovery (WBD) and telco BT, increased to £187 million ($250m) during its first year (to July 2024) after a rebrand from BT Sport.
Tom Morrod, co-founder, Caretta Research tells Streaming Media, “TNT’s losses are not unique and reflect broader challenges for all subscription sports video services. They are struggling in a fragmented market, where sports subscription and advertising revenues are split across an increasing array of channels, apps, and services. This makes it difficult to offset the high cost of sports rights acquisition and sports production.”
TNT Sports—which holds a share of rights to a range of top-tier sporting properties, including across soccer (like the UEFA Champions League and English Premier League), rugby union, boxing, basketball, and sailing—brought in $8.3m in content revenue, up from $7.1m the prior year. It also collected increased revenue from customer contracts of $1.54bn (from $1.46bn) and more advertising where revenue increased in year to $96.5m from $68.4m.
In February, TNT Sports integrated Discovery’s legacy multi-sport brand Eurosport into its linear and digital portfolio, a move which could increase subscription revenue even further.
TNT Sports doesn’t have a direct contractual relationship with viewers. Instead, it has deals with pay TV platform operators including Sky and EE and with WBD for carriage on Discovery+. Indeed, TNT Sports’ distribution revenue jumped from $1.37bn to $1.43bn. As a result of the continuing losses, RXTV thinks the broadcaster may seek more money per subscriber from operators, with rises then passed down to viewers.
Morrod added, “All sports broadcasters and streamers need to focus on improving production workflow efficiency and invest in technologies that will help grow advertising revenue and increase subscriber retention.”
A statement from the TNT Sports board said, “The United Kingdom sports broadcasting sector is a mature market driven by strong demand for live sports content, widely distributed across digital and traditional platforms. The rise of streaming services offers further opportunities to enhance viewer experiences. The strategy of the company is to capitalise on this strong demand for live sport to deliver growth whilst also developing further product improvements to drive customer value.”
UK TV sports rights growth
The value of TV rights in the UK saw rapid growth between the early 2010s until 2018, spurred by the competitive tension between the leading two pay TV platforms Sky and BT, for whom premium sports rights represented a key competitive battleground.
Most of this growth has come from the largest two competitions in the market: the English Premier League and the UEFA Champions League, which account for a combined 55% of the total value of sports TV rights in the UK.
Other competitions have also seen remarkable growth, notably Formula 1 and English international both of which have Sky as a major—if not exclusive—rights partner.
“The general economic realities of the broadcasting sector, which see pay TV subscriptions stagnating, TV advertising revenues declining, and BBC income subject to a licence fee freeze, are putting sports budgets under pressure,” said Ampere Analysis in a report commissioned by UK media regulator Ofcom.
Similar observations can be made about the consumption of sports highlights, traditionally a major way in which audiences engage with sports content on television.
“Linear TV viewing of key highlights shows are declining, and viewing is significantly lower among younger audiences,” the report said. It noted the rise in new highlights formats distributed online and to social platforms as the primary access to sports video among younger demographics.
“They spend more time than the average sports fan engaging with other types of sports content such as engaging with athletes through social media, and more time than the average watching highlights and clips from games,” says Daniel Harraghy, Research Manager Sports, Ampere.
“The fact that younger demographics are still watching live sport more than they are with highlights suggest that live is still really valuable,” Harraghy added. “The fact that they want to watch sports through streaming suggests that streaming platforms in the sports space are well positioned to be key media rights buyers and broadcasters of the future.”
Ampere’s consumer data underscores a division between younger demographics, who prefer to watch sports via streaming, and older fans who prefer sports on linear TV. However, it also suggests that fans aged 18 to 34 years are actually willing to spend more on their favourite sports content than older generations. Ampere’s data further suggests younger fans spend more time watching live sports than they do engaging with non-live sports including highlights, digital clips or podcasts.
DAZN losses widen
TNT’s financial figures come after the billionaire owner of DAZN, Leonard Blavatnik, injected a further $827m into his loss-making sports streamer in January.
According to London business paper City AM, Blavatnik has now invested more than $6.7bn (£5.3bn) in the London-based service.
DAZN is owned by Access Industries, a New York-based private holding company founded by Blavatnik in 1986. DAZN’s revenue increased from $2.19bn to $2.86bn in 2023, even as pre-tax losses widened from $1.20bn to $1.43bn
DAZN has spent $1bn on exclusive global rights to the inaugural FIFA Club World Cup this summer, and has sublicensed a portion of the matches to Channel 5, the UK’s free to air broadcaster owned by Paramount Global.
The intense competition between the two largest pay TV platforms has meant that the UK has still seen relatively minimal investment in the sports rights market from subscription OTT services (such as DAZN or Amazon Prime), although this is likely to change as the streaming model continues to gain ground.
Profitability challenge
Sports rights are expensive. In a blog post on LinkedIn, Gareth Capon, the CEO at sport streaming specialist Grabyo, stresses that sports are IP you rent, but don’t own.
“The tough part is that this only gives distributors the right to broadcast the games, not to own the IP,” he wrote. “You cannot ‘own’ a sport without buying it outright or creating a breakaway league or new format. As media companies pivot to this new age, controlling live content, especially sports, will be a linchpin of long-term success.”
Ampere’s Harraghy agrees that streamers face a “profitability challenge,” which is why we’ve seen rights holders carve out smaller packages for streamers to date. “There will be a slow burn transition as streamers gradually start to make sense of how to monetize sports rights most effectively. With many streamers in the early stages of broadcasting sport and still developing an understanding of its strategic merits, the race for sports rights is likely to be a marathon, not a sprint.”
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