Viaplay retrenchment casts doubt on broadcast of URC matches

Nordic company hopes to dispose of its sports commitments in this country, including the league in which Glasgow and Edinburgh compete

Viaplay
Ryan Wilson (far right) entertains Dougie Vipond, Pete Horne and Chris Paterson during a Viaplay broadcast of a URC game between Glasgow and Zebre at Scotstoun last season. Image: © Craig Watson. www.craigwatson.co.uk

VIAPLAY’s announcement that it is pulling out of the United Kingdom has left the future of the United Rugby Championship’s broadcast deal in doubt.

The Nordic broadcaster appears to have embarked on a planned retrenchment, with chief executive Jorgen Madsen Lindemann announcing earlier today that the company “will exit Poland, Baltics, UK, US and Canada to re-focus on the Nordics and Netherlands [and will] exit in the form of disposal, partnering or winding down the businesses.” Around a quarter of its staff are to be laid off and significant losses are expected to be announced soon. 

Disposal would mean a direct sale of Viaplay’s contract with the URC, under which it shows every match both in the regular season and the play-offs. That would ensure a measure of continuity, as would partnering, in which a new company would come in and share the costs. “Winding down the businesses”, however, could be more problematic, potentially forcing the URC to seek entirely new broadcasters.

A spokesperson for the URC, which includes Glasgow Warriors and Edinburgh among its 16 teams, declined to comment this afternoon.

Viaplay acquired Premier Sports and its broadcast rights last season, and in addition to its rugby coverage also shows the Scotland men’s national football team matches as well as the Scottish League Cup. It is due to show Motherwell’s game against Queen’s Park in the League Cup on Saturday and it confirmed today that that broadcast will go ahead.

“We are today announcing a new strategy and plan, which includes, but is not limited to, focusing on our core Nordic, Netherlands and Viaplay Select operations (which make available a wide range of Viaplay series, films and documentaries through partners around the world),” Lindemann, who only took over from the previous chief executive last month, said this morning.

“[We are] implementing a new operational model, downsizing, partnering or exiting our other international markets, rightsizing and pricing our product offering in the Nordics and undertaking a major cost-reduction program. The content investments that have been made are not all paying off, and are committed in the short and medium term. Furthermore, the pursuit of subscriber volume growth has been at the cost of value, especially when it comes to our partner agreements.

“The weakness in the advertising markets and currency exchange rates are additional factors that we must live with. The international expansion assumptions, including the timelines to profitability, have also been pushed materially into the future since the expansion started.”

This afternoon a spokesperson for Viaplay insisted there was no immediate threat to its sports broadcasts, saying:

“As per our report, we have announced a new strategic plan where Viaplay Group’s focus going forward will be in the Nordic markets, in the Netherlands and on our Viaplay Select business. We have initiated a strategic review for our other international markets, including the UK, where we will seek optimal solutions for our operations, including partnerships.

“Until then it is business as usual. What our customers can watch on Viaplay today will be there tomorrow too. As soon as we have any updates, we will of course communicate.”

However, given Viaplay’s worsened financial position, it is clear that “business as usual” cannot carry on indefinitely. And if “optimal solutions” cannot be found, the URC and other sports governing bodies will, by definition, have to look for sub-optimal answers.

 

About Stuart Bathgate 1412 Articles
Stuart has been the rugby correspondent for both The Scotsman and The Herald, and was also The Scotsman’s chief sports writer for 14 years from 2000.

21 Comments

  1. Not sure why all the chat is about CVC when the article is about Viaplay.

    Clearly Viaplay are not making money and so this is an issue about how a sports TV company brings in enough revenue to cover its costs and on the basis their revenue is primarily subscription costs then they are not selling enough subscriptions. So the issue is not enough rugby fans willing to pay a subscription to watch the URC. I guess the options are for one of the bigger boys – BT or Sky to take it on. But they may not believe its worthwhile if they wouldn’t get enough new subscriptions to cover their costs. Many already have subscriptions for one of them already.

    It would be disastrous if nobody took it on but the root of the problem is a lack of a rugby fan base willing to pay.

  2. Every sport that has let CVC in has regretted it and plenty of people stated that when the deal was originally done but the Dodson fan club / cult refuse to hear anything that vaguely relates to reality.

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  3. URC are supposed to do checks on the financial viability of anyone to whom they sell. It’s Setanta all over again.

    I’d be quite happy if, long term, this results in a shift of the rugby corridors of power away from Ireland.

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  4. A planned retrenchment? Really?

    Collapse of share price based on shocking business fundamentals means this is a crisis move. Nothing planned except survival.

  5. This is really bad news in a market where traditional media companies are really suffering, it will be hard to match Viaplay income. And with many clubs under pressure – particularly the Welsh this could cause serious financial difficulties.

  6. “…£120m for a 28% interest in the United Rugby Championship (URC)…. they were positioned as a potential commercial turning point for the game with CVC bring its expertise from investing in other sports to bear to effectively grow commercial revenues through new and improved media and advertising deals.”

    Ok CVC, this is what we brought you on board for as a partner. Time to deliver on your apparent expertise.

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    • No, dear chap, they didn’t smooth the sheets for what you say!
      The myopic shysters in charge of URC (certainly from the Scottish perspective) were simply grabbing for a fast buck, any buck – at a time of, shall we say, impending financial stress. Aka, a bailout against financial imprudence and downright mismanagement.
      All good input for the one-year bonus clickometer, mind you!

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      • Well, I wouldn’t disagree ES. Nevertheless, this was what we were ‘sold’ at the time as one of the major benefits of this deal and this is now being brought sharply into focus.

      • what nonsense. I guess the 6 Nations were also pushed by myopic bonus seeking SRU? And the English Premiership?
        Its fair to question the wisdom of partnering CVC, absolutely is, but best to stick to facts rather than myopic agenda driven rants

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    • Don’t take this personally it isn’t meant as a critique of your hopes, but anyone that thinks that Venture Capitalist companies have any thoughts on benefitting anybody but themselves and the profit line probably still believes in the Tooth Fairy.

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      • you are of course correct George. But the deal means profit for them means profit for their partners as well. If they fail to deliver profits, they lose their upfront payments to URC etc
        It was a risk though. Basically we got an advance on income, payback only comes if income grows sufficiently and this situation (Viaplay) doesn’t help

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      • The CVC/URC deal to acquire a share of the undertaking wasn’t any form of securitisation, Seppy – and you would be wrong to conflate that one with the entirely separate 6N transaction (as you appear to have done).

        Having devoted part of a kaleidoscope career to investment / VC, difficult to argue with George’s summation that CVC are only in business to make coin…. However, Dodson & co did negotiate accelerated payments from CVC within the overall deal frameworks to save their bacon, reflecting positively in the revenue column of certain executive bonus spreadsheets (at a time when the SRU was running up hard against the financial buffers – SRU bank unwilling to extend credit, bills going unpaid beyond normal terms, and since-departed auditors refusing to sign off on the “going concern” basis). Yep, Sep, as you say in response to Mr Stein – let’s stick to the facts, the truth, eh? Really depends upon how (closely) you look at them! Go figure.

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      • CVC are not a charity, they are in business to make money. They have a vested interest in protecting their investment in the URC but they are not media brokers and don’t have the staff to bring a deal to the table. They do have connections which could be helpful following investment in F1 etc. The real issue is that if the URC had the viewing numbers media companies would be jumping to buy the contract. The simple fact is the URC don’t have the viewing numbers. With today’s technology using drones etc the URC could televise matches at a much cheaper cost (no pundits or far fewer pundits in a studio) and sell the live stream which might make them more money. And don’t say drones are rubbish, I’ve seen it work very effectively with Rugby in Denver.

      • Ron, Dodson didn’t negotiate anything with CVC, the then pro14 did (of which the SRU were but one shareholder). All shareholders (unions) as I understand it got the same advance of monies in return for URC sharing future earnings.
        BTW I am not particularly defending the CVC deal, that was always a risk and can only be judged on outcomes- a risk which others have taken and others will in future; SARU were in advanced talks with CVC and NZ with another lot (Silver Lake). All deals may be structured differently, but partnering with the likes of CVC is not a Scottish only issue

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      • Sep – you are wide of the mark in that confection of generally inaccurate, out of date information. VC and investment, especially in a sort context, are to a significant extent “my game”, so please allow me to fill in some of the gaps, fyi….

        1. URC: Because of the numerical imbalance of participating teams, and different points of entry to the “league” (Celtic Rugby, ultimately Pro 14, becoming URC) the shareholdings and allocation of revenues, including CVC investment, the 2021 CVC investment of $169 million in respect of its 28% stake was divvied-up unequally between shareholders. A brief examination of SRU accounts will confirm that a then rather desperate Dodson managed to squeeze an accelerated tranche of this funding to ease the SRU’s cash crisis (arising from financial mismanagement – ask the previous auditors or the Union’s bank!). Nb this CVC money represented investment, not any form of securitised revenue advance.
        2. The NZRU $200 million investment deal with Silver Lake was concluded in 2022, not before considerable argument and difficulty amongst the NZRU management, Provincial Union members, AB players and other stakeholders – many of whom clearly failed to understand WTF was going on anyway!
        3. So far as I am aware, the tortuous CVC / SA Rugby discussions are still ongoing, without any conclusion or agreement 2 years down the line – principally due to the uncertainty surrounding SH International Rugby Championship and professional team participation, as they flirt with involvement in NH competitions & tournaments….. Although not short of cash, SA Rugby remain “interested” in attracting external 3rd party investment, and are not focusing solely on CVC as a potential source of funding.

        A constantly moving picture, but I hope the foregoing offers some clarity. Please NB also that at no point was any suggestion made that “partnering with the likes of CVC is only a Scottish issue” as you infer. On the other hand, the circumstances of each beneficiary of CVC investment in what is now the URC (still formally Celtic Rugby plc) and indeed the 6N are individually unique, and between the stakeholders, very different indeed.

      • Ron, tks for the long reply.
        When I said that stakeholders got the same deal, I meant in terms of pro rata to number of teams etc, not a same flat amount. Perhaps that could have been clearer.

        So CVC bought a share of Pro14 (as they did of the GP and 6N) and are now part owners. Previously any surplus made by the league was retured to clubs (at least according to its commercial director); is that still the case or is a pro rata ownership portion going to CVC?

      • Sep – so much smoke, and so many mirrors in all of this! All complicated by the introduction of CVC as owner of 28% of the action….

        Those of us outside the tent will just have to speculate (informed guesswork?) about the division of corporate revenue surpluses, or profits. I suspect the periodic / annual distribution of profits would be effective pro-rata to shareholdings, essentially as previously, with the money going to National Union shareholders for trickle-down to the clubs as they would determine – and 28% of these net revenue surpluses winging its way to Luxembourg.

        Without scrutiny of URC financial accounts, it might also be reasonable to assume that each signed-on participating club will be eligible for front-end “participation fees”, together with further agreed financial rewards calculated as bonus payments upon progress & status in the competition. These fees and performance-related bonuses paid to participating clubs would normally be applied as a charge against annual profits or the revenue surpluses referred to above.

      • yes, much smoke and mirrors Ron.

        Ig as you suggest/guess profits go pro rata to shareholders, and that included CVC, you can see why I said we have taken up front cash at the cost of future income. Have to cross fingers and hope that CVC somehow can grow profits sufficiently to make that a good gamble

    • They (CVC) don’t always get it right, Scot….. Here’s a salutary tale to the mess they made of their F1 stake.

      ….while delivering strong returns for its own investors, its reputation with buyers of its assets has sometimes been less glowing. Debenhams, which failed, and Saga, which collapsed in value, were both former CVC investments……

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