Takeover target Sky faces double soccer whammy

• by Paul Kennedy  @pkedit, Jan 26, 2017

The news has not been good for Sky, the British media company that's facing a multibillion-dollar takeover bid by 21st Century Fox. It reported lower half-year earnings with profits down 11 percent in the six months of the fiscal year that will end on June 30.

Cited as a contributing factor in the decline are the increased Premier League rights costs of $395 million from a new broadcast deal that went into effect in 2016-17.

Problem is, the increase in rights payments comes as the EPL has seen a drop in ratings. Despite improved play by the many of the top EPL teams, only leader Chelsea among the big six has enjoyed an increase in the year-to-year ratings for its televised games.

The viewership for the EPL is down 11 percent from last year but 13 percent on Sky. Few plausible explanations have been given for the declines, just as there was no easy explanation for the decline of 6.8 percent for the TV ratings during the NFL regular season.

“We have been led to believe the NFL and EPL were immune to these trends, but it turns out they aren’t,” said Rick Gentile, a former CBS Sports executive producer who now runs the Seton Hall University sports poll, told the New York Times in October. “This isn’t a fatal blow, but it is a wake-up call.”

Both Sky Sports and rival BT have made soccer a key selling point to their bundled subscription packages they offer and have been willing to pay increased fees for EPL coverage. (BT's EPL ratings are up due to better air times.) Next up for Sky Sports will a fight in March over rights to the UEFA Champions League held by BT.

Fox owns 39 percent of Sky, which made a roughly $14.6 billion bid for the shares it doesn't already own.