StarHub has announced the pricing for the UEFA Euro 2012 football tournament which will start from 8 Jun to 2 Jul; all viewers (regardless of whether they are from StarHub or SingTel) will be able to purchase the Pay-Per-View pack, with an early bird discounted price of S$58.85 before 30 Apr, instead of S$69.55. The Euro 2012 event is also the first test of the new cross-carriage mandate of exclusive content. But with the steeper pricing, we believe that StarHub is likely to just break even at best. And following the recent run-up since its 4Q11 results announcement, there is limited upside from here to our unchanged S$3.10 fair value. Hence from a valuation ground, we downgrade it to HOLD.
Steeper Euro 2012 pricing
StarHub has announced the pricing for the UEFA Euro 2012 football tournament which will start from 8 Jun to 2 Jul and jointly hosted by Poland and Ukraine. Starting from 27 Mar, all viewers (regardless of whether they are from StarHub or SingTel) will be able to purchase the Pay-Per-View pack, with an early bird discounted price of S$58.85 before 30 Apr, instead of S$69.55. We note that the pricing is a lot steeper than what it charged for the same tournament four years ago. Back then, sports group subscribers paid S$10-20 (before GST) while non-sports group subscribers paid S$50.
Higher content cost likely reason for hike
One reason behind the steeper price could be due to rising content cost – according to media reports, the pricing for broadcast rights for the 2012 event has more than doubled the 2008 event. For example, Vietnam was reported as paying some US$5m for the latest rights, as opposed to US$2m in 2008. As such, we are not surprised by the higher pricing announced by StarHub.
First test of cross-carriage mandate
The Euro 2012 event will also be the first test of the new cross-carriage mandate of exclusive content, where SingTel mio TV subscribers will also be able to purchase the pack at the same price (subject to a one-off connection fee of S$10.70). StarHub will be able to sell the content into more households beyond its 545k subscribers; SingTel has some 353k mio TV customers although we estimate that 50% may already own a StarHub setup box.
Downgrade to HOLD
With the steeper pricing, we believe that StarHub is likely to just break even at best. And following the recent run-up since its 4Q11 results announcement, there is limited upside from here to our unchanged S$3.10 fair value. Hence from a valuation ground, we downgrade it to HOLD.
StarHub has announced the pricing for the UEFA Euro 2012 football tournament which will start from 8 Jun to 2 Jul and jointly hosted by Poland and Ukraine. Starting from 27 Mar, all viewers (regardless of whether they are from StarHub or SingTel) will be able to purchase the Pay-Per-View pack, with an early bird discounted price of S$58.85 before 30 Apr, instead of S$69.55. We note that the pricing is a lot steeper than what it charged for the same tournament four years ago. Back then, sports group subscribers paid S$10-20 (before GST) while non-sports group subscribers paid S$50.
Higher content cost likely reason for hike
One reason behind the steeper price could be due to rising content cost – according to media reports, the pricing for broadcast rights for the 2012 event has more than doubled the 2008 event. For example, Vietnam was reported as paying some US$5m for the latest rights, as opposed to US$2m in 2008. As such, we are not surprised by the higher pricing announced by StarHub.
First test of cross-carriage mandate
The Euro 2012 event will also be the first test of the new cross-carriage mandate of exclusive content, where SingTel mio TV subscribers will also be able to purchase the pack at the same price (subject to a one-off connection fee of S$10.70). StarHub will be able to sell the content into more households beyond its 545k subscribers; SingTel has some 353k mio TV customers although we estimate that 50% may already own a StarHub setup box.
Downgrade to HOLD
With the steeper pricing, we believe that StarHub is likely to just break even at best. And following the recent run-up since its 4Q11 results announcement, there is limited upside from here to our unchanged S$3.10 fair value. Hence from a valuation ground, we downgrade it to HOLD.
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