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
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