Friday, January 14, 2005

Telcos coughing up for content?

Yesterday afternoon Telecom Italia disclosed a deal with Mediaset for pay-per-view rights to selected soccer matches of seven additional teams over its DSL platform. No financial details were disclosed, but I'd bet it didn't come cheap, because the teams included are the cream of Serie A. For the consumer it looks like reasonable value - the matches included can be purchased for EUR24 for the entire package (second half of the season) or EUR2.50 on an a la carte basis for live matches, EUR0.50 for recorded matches. Then again, the same matches will be available over DTT using the prepaid card slot on the set-top box. I will be very interested to see how the relative viewing shares of Mediaset and TI match up, if they are ever reported.

This comes on the heels of Versatel's coup in the Dutch market last month. Speaking of Versatel, Het Financieele Dagblad has a story on potential negotiations between Versatel and broadcasters SBS and RTL. My Dutch is a bit rusty, but the short Bloomberg article this morning translates Versatel as saying, "We will sit at the table with SBS and other commercial TV broadcasters, but we will not pay just any price." John de Mol is a canny player, no doubt, but having landed the soccer rights I assume there's also mounting pressure to build up some critical mass in terms of other content.

Map this sort of development across the rest of Europe, and we might just have us a little content bubble developing. STOXX Media sector has outperformed Telecom by 1% since the start of the year, and several stocks got an additional pop yesterday from Lord Hollick's (now of KKR) reported comments that an acquisition of ITV would "have a nice ring to it." As I argued in our year-end edition of the Daiwa Global Telecom Monthly, the best way to play telecom themes in 2005 may actually be through ancillary sectors, and Media may be a case in point.

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