Thursday, January 21, 2010

Broadcast of World Cup matches

How much should the operator pay for the right to broadcast the World Cup matches in Singapore? FIFA wants $100 million. The operator (Singtel, Starhub or both) offers to pay a lower fee, as they are not likely to get sufficient revenue to make a profit.

This is free market at work (or rather, fail to work). There is free negotiation, but there is no real market, as there is only one supplier, i.e. FIFA. Is FIFA abusing its monopolistic pricing power, or is it just trying to get a fair amount from affluent Singaporeans?

Rather than pay a flat fee, it would be better for the operator to work with FIFA on a revenue sharing formula. FIFA can decide on a fee per viewer (for the entire series of matches) and the operator can add on its charges to offer the final product to consumers. The price charged will determine the number of subscribers who are willing to pay this fee.

Let me make a guess about a fair fee to pay to FIFA. I estimate that 300,000 homes would be willing to pay $150 to watch the matches on TV. The operator has to keep $50 to cover its marketing and operating cost. This would leave $100 per subscriber for FIFA, or an estimated $30 million for 300,000 subscribers.  If the viewer is willing to pay $200, the fee to FIFA could be increased to $45 million.

I hope that the operator can agree with FIFA on a revenue sharing model or FIFA should reduce its fee to $30 to 45 million. This would be in the interest of soccer and sports.

Tan Kin Lian

9 comments:

Unknown said...

You left out of the equation that the cable TV companies can make a lot of money from advertisers, so it's not as clear cut as you say.

Anonymous said...

No problem ! If cannot view local channel, just view Malyasian or Indonesian channel for free ! I think we should be able to receive Malaysian TV signal easily. Certain location in our island can even receive Indo TV signals! Try it !

Thien Rong said...

Probably crazy to say this, the money could be better used on promoting Singapore soccer to get them into the World Cup.

slo said...

Mr Tan,
you are subscribing to the idea of paying up? I can only attribute the demand for a high fee due to the way our telcos behave, outbiding each other for the EPL. Its as if they owe us no responsibilty despite charging us 110 dollars a year for the TV licence. Like in any part of our lives, they choose to outsource our entertaintment to 3rd party providers leaving the Free to air programs heavilty localised. Sure our viewers base is small, might as well outsource this to Astro and plant satellite recivers at our balconies to achieve maximum savings.

Anonymous said...

You want to watch, you pay. Simple as that. Cannot pay or don't want to pay, don't watch.

TV license fees is a government "tax" for letting you have free credible programmes such as news. Don't lump it with watching soccer.

Anonymous said...

Free-to-air TV does not only mean news. The $110 TV license collected is a substantial amount that can be better used to bring in better programmes, instead of the endless numbers of cheapo and brain-dead reality shows, variety shows and game shows. Mediacorp thinks that only bo-liao housewives and retirees watch free-to-air TV. And MDA is a pliant accomplice in this sad state of affairs.

Much of the $$$ budget going to Mediacorp is paying for high salaries. E.g. $6K salaries for radio DJs, $8K salaries for CNA newsreaders. CNA correspondents based overseas are living the high life. E.g. The lady reporter in Beijing stays in all-expense paid posh condo in central Beijing costing $8K per month. Coz one of my acquaintences also stay in same condo building.

Robert Tan said...

$100m seems like a large amount to pay to watch the world cup. I would have thought there are so many other better ways to spend the money to help the less fortunate, improve amenities etc-maybe even helping the earthquake victims in Haiti. And we don't even need to spend half as much to do so much more good...

Anonymous said...

Forget abt Malaysia Channel, last world Cup RTM Block their Signal to Singapore during the World Cup period. So we can forget abt tapping into signal. Just hope the best.

Anonymous said...

i don't believe any average singaporean would pay more than $35 as per the last world cup.

the only reason why the price is so high was due to telcos relating the privilege of more subscribers signing up for a longer lock in period.

however, this only applies to epl matches which is annual.

the prestige of world cup is losing its lustre, as evident in the majority of football blogs around the world relegating the world cup to secondary status over the regularity of league football.

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