Bread and games
The dispute between cable TV operators and Swisscom over the use of sports broadcasting rights highlights the fault lines in future media policy—and points to opportunities for advertising.
"Sweet," says actor Carlos Leal in UPC Cablecom's commercial with a smug undertone to the breeze of the DSL offers, before having his head blown off by a wind machine, which is meant to symbolize the higher speeds for data in Cablecom's cable network. Now it's the sweets in Swisscom's DSL network that the cable industry is craving: In recent years, Swisscom subsidiary Cinetrade has acquired exclusive broadcasting rights for national sporting events, especially in soccer and ice hockey. With this content (and not higher speeds), Swisscom's TV offering has an advantage in the market. For this reason, three cable network companies have demanded from the Weko that Teleclub offer cable customers not only sports channels 1-3, but also 4-29 and the "Teleclub Live Sport" offer, and thus the same sports content as Swisscom TV.
This means that the play that has long been common practice abroad is now also being made here: Those who lose out in deals for sports rights resort to legal maneuvers. After all, the industry association Swisscable, together with SRG, also submitted a bid when the Super League put the TV rights out to tender, but fell by the wayside. And this is by no means the first time that the two sides have settled their differences before the Weko and/or the Federal Court. However, it is not without a certain irony that a good ten years ago it was exactly the other way around: Cablecom was only prepared to distribute Teleclub services via its network after a decision by the Weko. Now, at the beginning of April, the Weko announced that a preliminary investigation had "revealed indications of violations of antitrust law by Swisscom and Cinetrade or their pay TV provider Teleclub", which is why a proper investigation had been opened.
Fight for the last piece of cake
The digital TV market in Switzerland has been fiercely contested since the launch of "Bluewin TV," which has since been renamed "Swisscom TV," on November 1, 2006. The telecommunications giant thus entered the territory of the cable TV networks, which for their part were increasingly offering telecommunications services. To enhance its own TV offering, Swisscom began broadcasting first league matches, whether in football or ice hockey, from all stadiums, making Swisscom TV a must for serious sports fans. "We see live TV events as an important element in differentiating ourselves in the market. Sport supports the growth of the entire TV business in general," explained the Swisscom media spokesman at the time (see MTJ 10-2008, p. 34 ff). In the meantime, 85 percent of all households are connected to digital TV networks, and the obligation to broadcast analog programs ends at the end of 2014, as the Federal Office of Communications, Bakom, announced in mid-May. So it's all about grabbing as big a slice as possible of the last piece of the pie.
What is remarkable is the way Swisscom is involved in sports coverage. In the fall of 2004, it acquired 49 percent of the shares of Teleclub owner, CT Cinetrade AG, which today buys the sports rights for soccer and ice hockey in Switzerland. Although a full merger failed at the time because of a ruling by the Federal Court, the telecommunications giant announced in early May that it would now increase its stake to 75 percent. (Note the combined use of the "salami tactics" and "let the grass grow over it" stratagems). Cinetrade Group's activities include pay TV (Teleclub), movie theaters (Kitag), and exploitation of film rights via video and DVD. But Swisscom has also upgraded its online and mobile content and operates an editorial department for its sports portal on the web, the size of which, according to the imprint, can easily compete with the major media houses.
Leutenegger's agility
The role of Swisscable president Filippo Leutenegger in this affair is not without a smile. The FDP National Council member and former Arena presenter is known as a fighter against the SRG (for example, as president of the "Aktion Medienfreiheit" association). He said in an interview with Werbewoche last fall: "I want the media to be able to report freely, if possible without state interference and without being censored - that's part of the media's basic mission. That's why I'm not a fan of media politics - the less the state interferes, the better." And no sooner does the desire for competition in the media industry come to fruition than it doesn't. In a Swisscable media release at the start of the Weko investigation at the beginning of April, the otherwise emphatically pro-business politician is now even talking nationalization: "Football and ice hockey games are co-financed by the public and therefore belong to the public."
Publishers not against Swisscom
In view of the publishers' opposition to SRG, the Swiss Media Association should follow the arguments of its board member Leutenegger and oppose the market-dominating position of the ex-monopolist and its involvement in the content sector. But Urs F. Meyer, managing director of the association, waved it off when asked by Werbewoche: "The fact that the federal government holds a majority of shares is absolutely not comparable with the situation at SRG, where politics determines everything. (...) For the private media houses, it makes a big difference whether a competitor has to finance itself and hold its own in the market or whether it receives fees set by the state and operates under the blurred guise of public service." Tamedia and Ringier don't like to take a stand against Swisscom either - this is at least the impression given by the decidedly undifferentiated answers given by the respective press spokespersons to the relevant questions posed by Werbewoche.
The sports federations would suffer
If the Weko and later the Federal Court were to follow Swisscable's argumentation in favor of pooling sports rights, these would lose considerable value. This would affect sports associations such as the Super League, which today is largely financed by TV rights. With the license agreement now in force, it receives 28 million francs per season and has thus almost reached a price level (converted to games and inhabitants) comparable to the German Bundesliga. It is hard to imagine that anyone would pay anywhere near that amount if (according to whatever settlement model) the games had to be handed over to the competition for live broadcasting. And with such a regulation, Switzerland would be alone in international comparison.
Berlin Philharmonic as a role model?
Does the Roman emperors' recipe for success, Panem et Circenses (Bread and Games), also apply in a modern democracy to keep the people under its spell? Should fee money therefore be wasted in bidding races for TV rights, even if they reach ever more dizzying heights? Or is a media world conceivable for the moving image in the future that corresponds to the habits of print: everyone pays for what they want to read or see - whether as a subscription or in individual sales at the kiosk. Smart TV will make this possible. When the TV rights for Swiss soccer are next negotiated in 2016, many households will have TV sets that, when switched on, show an overview of the most popular apps (as with a smartphone) and not (as today) a live TV channel. Live TV will be accessible via one of the numerous apps, but will be less and less in demand. A typical example is Samsung's flagship app with the Berlin Philharmonic Orchestra, which offers live performances and an extensive concert archive as a premium service. Sports associations are already moving in this direction. The Super League's website is to be relaunched in the summer and its own reporting, including video, is to be expanded, as Claudius Schäfer, managing director of the Swiss Football League, told Werbewoche. Meanwhile, handball matches are already largely broadcast on the Internet.
Such a development is important for the communications industry: If sports broadcasts can be used today primarily via the sponsorship channel, distribution via smart TV or Internet TV opens up further interesting possibilities. In addition to a premium offer for the live broadcast of sporting events, other offers (e.g., with a more or less long time delay) that are financed via advertising are conceivable. Unlike today's TV advertising, spots can be played out according to the profile of the respective customer, making specific targeting possible. Such ads can be traded via the mechanisms of real-time bidding and can be designed free of licensing requirements. However, such new opportunities will only arise if the advertising industry approaches sports broadcasters at an early stage (now!) to establish joint solutions. Otherwise, in the next round of contracts, the high-reach sports such as soccer and ice hockey will proceed according to the motto "better a bird in the hand than a pigeon on the roof" and continue to rely heavily on existing partnerships.
Christoph J. Walther








