Billionaire Blavatnik Wants a Piece of America’s Biggest Sport

https://www.bloomberg.com/news/articles/2019-07-08/billionaire-blavatnik-wants-a-piece-of-america-s-biggest-sport

Billionaire Len Blavatnik’s streaming company DAZN is eyeing a bid for rights to show live U.S. National Football League games, in a challenge to some of the world’s biggest media companies.

NFL authorities are thinking of ending AT&T Inc.’s 25-year grip on some Sunday afternoon broadcasts to accommodate companies that show content via “over-the-top” apps on internet-enabled televisions.

That gives London-based DAZN a chance at the most popular U.S. sport after focusing so far on elite soccer and boxing in countries such as Germany, Italy and Japan. The bidding may be fierce, with local rivals such as Walt Disney Co.’s ESPN and Fox Sports looking to expand in streaming and Facebook Inc. and Amazon.com Inc. taking a growing interest in live sport.

“We’re definitely interested in looking at the NFL rights,” DAZN Chief Executive Officer Simon Denyer said in an interview. “Our strategy is to be a major player in sports rights via OTT, and the U.S. and Canada have the highest penetration of OTT in the world.”

DAZN already holds streaming rights to the NFL for Canada. The NFL has until September to decide whether to stick with its current $1.5 billion-a-year U.S. distribution contract with AT&T’s DirecTV for Sunday games that don’t feature a subscriber’s local team. DirecTV renewed the agreement in 2014 to keep the package until 2022, though it includes a break clause that allows the NFL to opt out of the current deal by the end of the 2019 season.

Don’t expect DAZN’s recent financial performance, including a loss last year of around half a billion pounds ($627 million), to curtail its ambitions.

Its 61-year-old, Ukraine-born backer Blavatnik, who made his money in the chaos that followed the collapse of the Soviet Union, controls a business empire including Warner Music and luxury real estate that has brought him an estimated fortune of $25 billion. DAZN must keep spending heavily on rights to get its subscriber base to the size needed to turn a profit. The company agreed in April to sell most of its Perform content unit to Vista Equity Partners to free up cash for investment.

Baseball Push

DAZN’s U.S. push began when it won rights to 100 boxing matches a year and it’s been streaming fights since December. In April it added Major League Baseball with coverage that excludes live games but takes viewers to all the major ball parks for updates.

Baseball has brought it thousands of new subscribers, according to a person familiar with the company’s plans, who asked not to be identified discussing internal figures.

Sports business commentator Yannick Ramcke said while baseball hasn’t driven meaningful subscription growth for DAZN, it has allowed the company to strike up relationships with major sports leagues before the next live rights come up for sale.

“You don’t just show up at the table and get your hands on them,” said Ramcke, who writes the offthefieldbusiness.de blog.

DAZN has grown by offering streamed sports for less than the prices typically charged by traditional pay-TV broadcasters. That’s brought it more than 4 million subscribers globally, of which around 1.2 million are in the U.S. Local sports streaming platform ESPN+, owned by Disney, has around 2 million subscribers. While streaming is growing fast, it’s still small compared to traditional sports networks that are usually bundled into cable packages. ESPN reaches around 86 million customers and Fox’s 21 regional sports networks about 74 million.

DAZN recently launched in Brazil, its ninth market. The company has said it wants to be in 20 countries by 2020. When asked to confirm the target, Denyer said only that DAZN would launch in new territories “later this year and next year.”

He said he wants to bulk up in the U.S. streaming market so DAZN is as well known there as it is in Germany and Japan.

A more prominent position in the country could make DAZN a more appealing acquisition target for a U.S. rival and make it easier for it to raise funds in the country’s financial markets. However, Denyer played down any U.S. listing plans.

“It’s easier if you’re a well-known brand,” said Denyer. “But we’re not raising brand awareness for the purpose of some sort of IPO,” he said. “There’s no way the company is actively considering an IPO, although we wouldn’t rule it out.”