The capital of the world is fiercely competing for scarce resources for sports events. The cost of this war may be that the money is burned out, and it may not be able to win the game.
In the morning of February 28th, it was reported that LeTV Sports may be deprived of the broadcasting rights of the AFC due to arrears in breach of contract. The First Financial Reporter asked the LeTV Sports for the failure of LeTV to pay the cooperation funds to the AFC on schedule. A senior LeTV Sports reporter told reporters: “The situation may be worse, there may be no AFC Champions copyright.”
Around noon that day, the AFC issued a statement saying that the release of the rights to broadcast the music with LeTV Sports will sell all the rights to the sports of the Olympic Games and broadcast the commercial competitions from 2017 to 2020. LeTV Sports expressed regret that it will compensate members.
In October 2015, LeTV Sports bought the AFC’s competition resources for a high price of 110 million US dollars. Since then, it has missed the repayment period of 100 million US dollars at the end of January this year and this week, and may even be sued by the AFC.
All the problems boil down to one problem – no money. Affected by the shortage of the capital chain, LeTV’s recent repayment record is getting worse and worse, and LeTV’s tight capital chain has made the company‘s development difficult.
The loss of AFC’s copyright to LeTV is disastrous, especially in an era when media companies are vying for copyright rights in scarce events from the Premier League to the Super League. In November last year, PPTV and the Premier League signed a three-year broadcast agreement worth $5 billion, which is more than ten times higher than the six-year agreement between 2013 and 2019 that Xinying Sports bought in 2012. . In August 2015, PPTV also signed a 1.8 billion yuan agreement with La Liga Alliance to win the exclusive all-media copyright of La Liga China in 2015~2020.
Gong Hua, a senior observer in the sports industry, told the First Financial Reporter: “The income of sports copyrights has already accounted for 50% to 60% of the global sports market revenue, and is still growing with the expansion of the sports market. The well-known IP event resources are scarce, and the increase in copyright fees is even more high.”
As the AFC sells the remaining copyrights of its events to the Olympics, it means that a new copyright dispute is about to break the existing broadcast market.
Zhao Jun, general manager of Sports Olympics, confirmed the cooperation with AFC Champion to the First Financial Journal. “Today (February 28) there is a game at night, and everyone is busy now.”
Sports Olympics has the top IP resources for sports events in the upper reaches of the sports industry, with a copyright sales network in the middle, and its own entertainment, film, operation and production services around the sports theme. Li Yidong, chairman of Sports Olympics, said in an interview that he hopes that he will no longer be just a copyright company, but will be involved in the management and operation of the event and become a sports industry chain company.
It is interesting to note who will be the copyright of the Super League event. Because there is no money, LeTV will give up the copyright of this year’s Super League event, then the PPTV of Suning, which is expected to participate in the Olympic Games, is likely to get the new media copyright of Super League. PPTV Sports declined to comment. However, this Friday‘s 2017 Super League event is about to reignite the war, these suspense will be announced in these days.
PPTV Sports has summarized the information to the First Financial News. At present, PPTV has already included the broadcasting rights of more than 10 sports events such as La Liga, Premier League, Champions League, Bundesliga, Dutch, Baba, CBA and NFL. Some of these access rights are negotiated directly with the alliance, such as La Liga, and some are obtained through the distribution of sports media companies. “For example, the Infront of the CBA copyright or the new English with the Premier League copyright has bought these copyrights independently, but they do not have a video playback platform, so they will be distributed to us.” PPTV Sports told the First Financial reporter, “But Premier League we signed directly with the copyright party, there is no distributor in the middle.”
Sports media companies are standing behind strong capital parties. For example, the investor of Sports Olympics is the Chinese Cultural Industry Investment Fund (CMC); behind Xinying Sports is IDG Capital. Take the Olympic Games Power’s previous 8 billion yuan to win the broadcast rights of the Super League. The business logic behind it is that the company relies on the strength of the capital side and is confident in distributing it to new media such as LeTV, so it is worthy of the price and pass some of the risks. New media was given.
But the problem now is that the money of the new media has already burned out. LeTV is the first representative to predict the crisis. “There is no basis for viewers to pay in China. We also want to know how long this kind of money-burning model can last? Who will win in the end?” A senior sports media person told the First Financial Reporter.
Although LeTV’s products and services are well-known in the industry, and the user experience outperforms its competitors, spending money to buy the future requires continuous cash flow supply, and the lack of paying users is a fatal shortcoming. “The domestic paid viewing model has not yet been established, and the scale of advertising revenue is small, which is difficult to support the high cost of copyright.” A senior executive of LeTV Sports told the First Financial Reporter.
An anonymous investor familiar with LeTV Sports told the First Financial Reporter: “In foreign countries, the sports copyright market is relatively mature, and many companies have invested heavily because there are enough paying users and advertisers to recover costs. However, Chinese companies still lack experience in this area.”