As the value of real-time content rises in an on-demand world, Discovery’s acquisition of another sports channel – Setanta Sports Asia – shows the nonfiction broadcaster, a new entrant in the space, preparing for a long-term fight.

“This is just the start for us,” declares Peter Hutton, CEO of European and Asian sports channel Eurosport, the foundation stone of Discovery’s diversification into sports which Discovery bought just over a year ago.

“We see Setanta as a very useful launching pad as we try and grow, but it’s only part of an Asian expansion story,” Hutton adds, speaking in an interview with Media Business Asia.

“We still think there’s room for a lot more quality sports content to come into the Discovery group in Asia, and we need to have room to show it and do it justice. This is part of the process.”

Discovery’s strategy for the higher-risk, tighter-margin world of sports, underwritten by a commitment to invest in top-tier rights, is most visible in Europe, where Eurosport has been rolling out more local feeds while securing exclusive market-specific rights.

At the same time, Eurosport has been burnishing its brand appeal, dropping fringe programming such as show jumping in favor of more driver properties to strengthen the core.

“As a channel you get remembered by your best content and by your worst content,” Hutton notes.

“As we invest more and more in big sports brands, you’ve also got to make sure everything you’re showing is up to your quality threshold.”

A Two-Channel Operation

Setanta – a US$2 million revenue franchise ex-Australia (according to estimates from Media Partners Asia) that specializes in rugby – provides Hutton with more bandwidth to construct an attractive sports portfolio in Asia. The deal, announced last week, excludes Setanta's Australia business, the channel's most valuable territory.

In the short term however, rugby fans are unlikely to see significant changes, beyond sharing of games playing at the same time with Eurosport, although the channel will be included on affiliate and ad sales conversations on the business side.

Hutton’s challenge is retaining Setanta’s existing viewers, while making them part of the broader Discovery audience.

“We certainly see it as an opportunity to buy a business, to change a business. We don’t see it staying in the same form,” Hutton tells Media Business Asia.

“We like the fact it’s got carriage on every major affiliate in Southeast Asia, and it’s got enough subscribers dedicated to it that they would complain if it ever went away. That’s a positive attribute for us,” Hutton adds.

“But we definitely see the content now coming into a bigger portfolio, as we try and develop Eurosport locally in different markets in Asia and bring the same Discovery content philosophy to sport in general across the whole territory.”

Further M&A could follow to broaden Discovery's Asian sports bouquet even further, although no negotiations are taking place at present.

One near-term priority is infrastructure buildout to enable more dedicated feeds in Asia, launched on the back of market-specific rights.

This will move Eurosport into closer competition with Fox Sports, which already boasts multiple feeds and is deepening its local presence with investments in production and closer partnerships with pay-TV operators.

Channel competition in Asia is likely to intensify further with a renewed push in the region by BeIn Sports, backed by Qatar’s sovereign wealth fund.

Sports is also likely to have massive appeal in the digital space, with the likes of Fox, ESPN, BeIn and Eurosport jockeying for pole position.

A degree of risk

Success for Discovery hinges on taking the right calls, while leveraging the broadcaster’s resources to pursue long-term goals, Hutton says.

“Sports rights take time, but there’s a lot of premium content becoming available in the next 12 months,” he notes. “We will be part of those conversations.”

The initial focus will be on localizing international properties, leveraging Discovery’s broader network for reach and promotion, while looking for franchises that can also have a life on other channels.

Hutton has already demonstrated his willingness to carve out territory specific franchises in the region, buying Champions League and Europa League football in Singapore.

While the ROI on these bets are yet to play out (that will require strong execution, production and a significant buy-in from local pay-TV providers StarHub and Singtel TV), they may be worth making for Eurosport, which has been on the periphery across Southeast Asia in recent years.