EconomyFinancialLauman Group plans a "refreshed" to Fox Sports to...

Lauman Group plans a "refreshed" to Fox Sports to maintain its leadership

It took 27 months for Disney to find a buyer for Fox Sports in Mexico. After a series of extensions granted by the Federal Telecommunications Institute (IFT) to the entertainment company, on June 8 the news broke: Lauman Group would be the new owner of the sports channel. This business, which although it is not completely alien to it, comes with a series of challenges that the holding company plans to overcome with a ‘refreshed’.

The conglomerate chaired by businessman Manuel Arroyo, controller of the media outlet El Financiero and telecommunications service provider Comtelsat, has a working relationship of more than a decade with the company it has just acquired. This does not represent any conflict of interest for the regulatory body, which authorized the purchase-sale contract, ensuring that this transaction did not generate concentration phenomena or competition risks in the market.

“A company in my group –Comtelsat– had already been providing services to Fox Sports in all the part of generating the content for them, they paid us the rent of the building and the equipment. It is a business that we started more than 15 years ago ”, explains Manuel Arroyo. However, “we have no conflict of interest, since we had no editorial or commercial content decision, nor absolutely anything to do with the channels, we simply rented the equipment and the building.”

For the IFT this was enough: “(Lauman Group) has not had a previous business relationship with Disney / 21CF that puts the object of divestiture at risk and the free competition of this market (…) does not generate concentration phenomena”, it said in a statement.

This closeness that they have maintained with the business, beyond being an impediment, became a great advantage for Grupo Lauman, because it has known very well the work that has been carried out by Fox Sports.

“What we were interested in was that the brand and the channels subsisted and that it be managed by a Mexican group. We already knew it, but we wanted to put our own content. That was what made us continue with the purchase intention “, says the businessman.

Maintain leadership

Disney’s sale of the sports channel was one of the conditions imposed by the IFT to authorize the purchase of Fox and avoid audience concentration. The acquisition brings a series of challenges for the Mexican conglomerate, among which the acquisition and renewal of content rights and the development of competitive strategies that allow it to ensure leadership in the preference of the audience stand out.

Jorge Bravo, president of the Mexican Information Association (AMEDI), points out that at this moment the most valuable asset that Fox Sports has are its transmission rights and the channel will be competitive while those contracts last. The man now, according to the specialist, is that he no longer has a media emporium like Tewnty-First Century Fox to back up, which could lead the channel to a loss of rights to broadcast content.

“The problem is that it was done with the support of the transnational, by not having it, it may lose some of those advantages, such as being on all pay television systems in Mexico. The Lauman Group does not have the same negotiation capacity as an international Fox to acquire them ”, he mentions.

In May, HBO Max announced that it had the exclusivity of the Champions League, which ESPN and Fox Sports broadcast for years, and which from August will be able to be seen through the streaming platform. The last thing fans could see on pay channels was the final of the soccer tournament a couple of weeks ago.

For now, the sports channel maintains the rights to Liga MX (Monterrey, Querétaro, León, Pachuca, Tijuana and Santos), some matches of Liga MX Femenil and Liga de Expansión. As well as meetings of the MLB, the NFL, the Bundesliga, the Concacaf Champions League, the Club World Cup, WWE and Formula 1.

“What clearly matters is not neglecting the possession of rights that you have, because that keeps you on the spectrum. He is a player with a lot of weight in the content market, but if he neglects his licenses he will begin to lose relevance in the matter of broadcasts, that is where he can fear for his potential and even die as a player by going unnoticed by the audience. The Lauman Group has to be very careful to keep the channel fresh ”, warns Radamés Camargo, analysis manager of the consulting firm The CIU.

On this issue, Manuel Arroyo has a plan, in which he also claims to keep the name of the television channel and even the work team itself, which had been speculated that it could change. For Efrén Páez, senior analyst at Digital Policy & Law, it is a success, since the brand is so positioned in the market that it would be a mistake to modify it, although perhaps it would be time to renew it and give it a certain local identity.

“We continue with the same name, we will continue to operate under Fox Sports. We will continue to compete in the market and develop sports so that the channel continues to be a leader in the segment, we are going to give a ‘refreshed’ to everything that has been done. The channel was the same for approximately two years, now we are going to put a little more technology, which is what we know how to do, keep talent and staff, and continue to catapult Fox as a leader, we will continue to do so, “says the president. from Lauman Group.

For the Mexican businessman, it is still too early to think of a specific investment amount to “refresh” the channel, even in a modification to the programming. At the moment he is focused on taking control and completing the operation, which will take a few months. “Once finished, we will begin to implement the changes that we consider to be competitive,” he says.

Without a clear scenario, what is certain is that Arroyo now has the number one in sports in his hands. According to the IFT’s ‘National Survey of Audiovisual Content Consumption 2019’, Fox Sports is the leading provider in this segment on pay television, owning 52% of the audience, and it is also the fourth exclusive channel of this signal most tuned to eleven%.

A controversial business

The purchase made by the Lauman Group has given us something to talk about. And not only because the operation was completed just at the end of the term that the institute gave to receive the rules of the trust that should be created to transfer the Fox Sports assets, but because the MediaPro Group, which was one of the bidders, assured that the authorization process was not yet closed, so he was still in contention.

That the Spanish chain was interested in the sports channel led TV Azteca, owned by Ricardo Salinas Pliego (of which there were rumors that it could be interested in some rights) to reveal the problems that the company left in France when it ‘abandoned’ the Professional Soccer League (LFP). So far, MediaPro has not commented on the matter.

The ‘Mediapro Case’, as it is known in the European country, began when the multinational in charge of the transmission of local matches asked to renegotiate the contract for the acquisition of rights after the pandemic, after failing to pay the teams more than 320 million euros due to the impact of the health crisis. But the LFP refused and concluded the agreement in December of last year.

In 2018, the Spanish chain signed a contract of 814 million euros a year for 80% of the broadcasting rights of the French league matches for the period 2020-2024, taking power away from Canal +, which since 1984 was in charge of diffusion. At that time, Maxime Saada, president of the Canal + board, regretted not having won in the auction, but the amount to be paid seemed excessive and questioned Mediapro’s decision, assuring that it would not be profitable in the long term.

Although it seems that the fight will not transcend in Mexico, since Fox Sports already has an owner. Experts assure that the intention of the Spanish chain to ensure its place in the country does not cease, so the story will continue.

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