Bottom line: Sina’s new deal to broadcast the video channel of the Manchester United soccer team looks like a good bet, while LeTV’s new deal to broadcast US baseball games is more likely to strike out.
Leading web portal Sina (Nasdsaq: SINA) and online video giant LeTV (Shenzhen: 300104) have just announced 2 new sporting deals, extending a recent streak of similar investments by media companies in search of exclusive content. The first deal will see Sina become the official broadcaster in China for Britain’s Manchester United soccer club, while the second will see LeTV’s sports division get similar rights for live broadcasts of US Major League Baseball (MLB).
Both moves are really just licensing deals, though each could become an important new revenue source for Sina and LeTV as they search for exclusive content to lure viewers to their services. From a quantity perspective, LeTV is the big winner in this new round of deals since it will gain rights to hundreds of baseball games played in America each year. But Sina is the winner from a quality perspective, since soccer is far more popular in China than baseball, which is relatively unknown among average Chinese.
Let’s begin with the Sina deal, which in my view looks like the overall winner among these 2 latest tie-ups. The multi-year deal will make Manchester United’s MUTV video channel available to Chinese viewers via Sina. (company announcement) The announcement notes that Manchester United has more than 100 million fans in China, which may be a slight exaggeration but probably isn’t far from the truth.
Sina said it will make the channel available to its viewers over multiple platforms, including its traditional website, along with its mobile site and mobile app. There’s no word on whether the channel will be free or require payments, though I suspect it might be the latter. But considering the team’s big popularity in China, I do expect that quite a few fans would be willing to pay for the channel.
Next there’s the MLB deal, which will see LeTV’s sports unit obtain rights to broadcast 125 baseball games each season in China for the next 3 years. (company announcement) Like Sina, LeTV’s sports unit will make the games available over most of its platforms, including its webpage, mobile apps and other devices. Again, there’s no word on whether Chinese viewers will need to pay to watch the games, but I suspect they will.
Booming Sports Tie-Ups
Both deals are the latest between Chinese Internet companies looking for exclusive content, and sports teams trying to promote their brands and images among local viewers. In late December, electronics retailing giant Suning (Shenzhen: 002024) announced an investment in a soccer club based in Jiangsu province, presumably aimed at providing content for its PPTV online video service. (previous post)
Alibaba (NYSE: BABA) has also taken a similar approach through an investment by its founder Jack Ma in a leading Chinese soccer club based in southern Guangdong province. Other companies also making recent sports investments include real estate giant Wanda and state-run TV station operator Shanghai Media Group (SMG).
Frankly speaking, this sudden rush into sporting investments has all the markings of the kind of bandwagon mentality you often see in fast-developing industries in China. Those movements usually see companies invest millions of dollars in the newest hot area, only to go bust when industries become overheated and loses become unsustainable.
It’s too early to say if the same will be true for these sporting investments, especially because most of the Chinese players are backed by major companies with diversified income sources. Still, I wouldn’t be surprised to see a few of these deals and investments ultimately turn sour, especially ones like LeTV’s that are in areas of marginal interest to Chinese viewers and therefore could lose big money.
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