Economists say Telekom overpaid for Premier League TV Rights

NEWS 22.07.202114:34
Telekom Srbija, Telekom, zgrada Telekoma, logo, Mujan

Danas daily quoted economy experts who said the price that Telekom Serbia paid for TV rights to the Premier League was too high to be profitable, adding that this seems to be a political not a market decision.

Telekom Serbia paid 600 million Euro for the TV rights to six seasons of the English Premier League which experts believe is excessive and is an effort by the Serbian authorities to lure customers away from SBB and to its Supernova cable service provider.

Metropolitan University – FEFA Professor Goran Radosavljevic calculated that some 300,000 Euros per match has to be secured in advertising revenue to cover the price paid by Telekom Serbia. His calculation is based on 100 million Euro for 380 matches. “The question is whether there are enough companies able to pay that unless state companies are forced to advertise. The problem is that we now have a state-owned company with an open account and can draw as much money as it wants, even from the primary emission as we saw with the corporate bonds bought by the National Bank of Serbia (NBS). The purchase of smaller cable operators (by Telekom) for high prices proved to be unprofitable. The debt is huge,” he said.

Radosavljevic said that an investigation would be launched in countries which have laws and institutions. “Every unusually low or unusually high transaction falls under the jurisdiction of the Commission to Protect Competition, especially if it’s about a state company and there’s work for other institutions such as the State Auditing Institution,” he said.

TMF Professor Petar Djukic said a deal like this would not have been made by the private sector. “We can expect anything in the public sector now. What worries me in this case is the fact that Telekom, whose balance books showed that it was in a crisis last year, is entering into an investment of more than half a billion Euro for a sports program. This seems more like a political than a market solution,” he said.

Futura University professor Bozo Draskovic said the Telekom decision is hard to gauge because it’s not transparent. “The common practice in our state companies is that managers are not accountable to the public. There is no analysis of the reasons for huge investments, the short-term and long-term effects and the return on the investment. We can’t speculate whether this is a lot or a little. The situation was similar in terms of the purchase of cable operators when a lot of money was paid. The important thing is to keep the public entertained and we don’t know what this will cost taxpayers,” he said.

Economist Milan Kovacevic agreed that the goal is to win viewers regardless of the cost. “This is a shareholder society in which several million of us citizens have shares. We should pressure the state to float Telekom on the stock exchange, make it a public shareholder society and get better business control. Most of these steps seem to be political, not market steps benefiting the company,” he said.

Newsmax Adria CEO Slobodan Georgiev told Danas that “everything that Telekom does comes from President Aleksandar Vucic’s cabinet”, adding that this is an affair of state. He said that the whole thing started in the summer of 2018 when Vladimir Lucic was brought in from Montenegro to take over as Telekom CEO and is continuing unabated using public money. According to him, anything goes after the purchase of the Antena Group for 200 million Euro. “The exorbitant amount for the Premier League is just part of that approach whose goal was revealed by Vucic: removing United Media from the market in Serbia,” he said adding that the final goal is to have only media under Vucic’s control. “It seemed that this is set to happen next summer on the 10th anniversary of his coming to power. The question now is what the people opposed to this want and can do? I think that everything that is being done has not business justification and is not an improvement of services or the media market. All this is to demean any journalism in Serbia now that politics have been killed,” Georgiev said.

Former Public Information Commissioner, lawyer Rodoljub Sabic told Danas that he didn’t believe it when he first heard the amount, adding that it was much more than operators paid for the Premier League on the richer markets of Germany, Switzerland and Austria. “It’s also much more than Sport Klub paid for those rights in our region. None of the economy experts I consulted sees this as an economically rational step nor any chance of earning the money back, let alone earning something,” he said. According to him, this opens several questions, two of which are crucial. “First, is the real goal continuing the war and jeopardizing the competition? And second, is this an effort to pump money out of the state treasury with a large part of the money reserved for something else,” he said and added that the Telekom management can’t simply declare the deal a business secret.