“All-in costs (for EPL) — rights fee, content production, broadcasting — over three years could come to US$300 million. I would expect subscription rates to gradually move up in line with the cost increase,” a source close to Astro said.

Clarifying news reports yesterday, Astro chief operating officer Henry Tan said unlike previous years, Astro had submitted a joint bid with ESPN Star Sports (ESS) for the broadcast rights in Malaysia from the FA Premier League.

“This is in line with Astro’s strategy to strengthen its position as a leading producer of appealing television content,” he told The Edge Financial Daily yesterday.

In a statement earlier, Tan said the rights to the EPL, officially known as the Barclays Premier League (BPL), had cost the company “a higher price than anticipated” as “competitive environment drove the rights prices up”, without saying how much the company paid.

Astro “remains committed” to providing customers with “more premium content at good value”, Tan added in the statement.

ESS, Asia’s biggest sports content provider and long-time holder of the Asia Premier League rights, won the exclusive rights for the 2010/2013 EPL in 18 markets across Asia, namely India, Indonesia, East Timor, Cambodia, Laos, Myanmar, North and South Korea, the Philippines, Bangladesh, Bhutan, Maldives, Mongolia, Nepal, Pakistan, Sri Lanka, and in partnership with Astro for Malaysia and Brunei.

Singapore Telecommunications Ltd’s (SingTel) Oct 1 EPL coup on incumbent StarHub Ltd had sent the latter’s share price lower and cast the spotlight on the “bidding war” for Malaysia.

SingTel is believed to have paid S$400 million (US$283 million or RM976 million) to clinch the 2010/2013 EPL rights for Singapore, according to unconfirmed news reports, almost double the US$150 million StarHub was said to have paid in 2006.

As a result, pay-TV operator StarHub will no longer carry ESPN, STAR Sports and STAR Cricket channels after its current rights expire in May 2010.

For the current 2006/2009 season, Astro saw the cost of its EPL rights jump when Telekom Malaysia Bhd submitted its maiden bid for the rights, together with dominant free-to-air broadcaster Media Prima Bhd.

Astro, which had 2.78 million residential subscribers as at end-July 2009, had added over one million customers from the previous round of bidding for the EPL rights in 2006.

About 70% of Astro’s customers subscribe to its sports content. It is learnt that Astro had paid some RM400 million in 2006 for the EPL rights.

Astro’s management had previously guided analysts that sports content cost will be about 35% of total content cost for FY1/2010, up from 30.2% in FY1/2009 and 25.5% the year before.

Based on these statistics, and assuming Astro grows its subscriber base to about three million (with 2.1 million subscribers or 70% sports content take-up), it is estimated that Astro’s US$300 million EPL cost would average about US$143 per subscriber (or about RM14 per subscriber per month) for the 2010/2013 season.

This is about 55% more than the estimated 2006/2009 EPL cost of RM321 per subscriber for the three years, or RM9 per subscriber per month on average.

 Astro aims to maintain its customer acquisition cost at around RM700 per box.

Based on the S$400 million SingTel is said to have paid, and assuming that it manages to triple its customers with at least 300,000 users taking up sports, its 2010/2013 EPL cost is estimated at about S$1,333 per subscriber. At 400,000 users, the cost would fall to about S$1,000 per subscriber.

SingTel’s EPL cost per subscriber is higher than Astro’s as it is likely to have worked into its bid the cost of acquiring new customers, given that its “mio TV” service is the newcomer with only 101,000 as at end-June, versus StarHub’s 530,000 customers.

This would explain why SingTel could justify being more aggressive than StarHub which, like Astro, was bidding to retain its customers. StarHub had 487,000 pay-TV customers at end-2006.

In a joint statement yesterday morning, ESS and Astro said that as part of their arrangement, “for the first time, all 380 matches of EPL will be available to be shown live on ESPN, STAR Sports and Astro channels”.

Astro continues to have exclusive rights to the said channels. Up to 190 matches are also available on a video-on-demand (VOD) basis, ESS said in a separate statement yesterday.

This article appeared in The Edge Financial Daily, October 8, 2009.