DirecTV Buys Rights to Show World Cup

DirecTV is betting millions that the passion for soccer in Latin America can overcome the affection there for free TV.

On Tuesday, DirecTV Latin America announced that it had bought exclusive broadcast rights in Mexico and five other countries to World Cup soccer tournaments through 2006. The deal calls for the company--a joint effort by DirecTV’s parent, Hughes Electronics, and the Cisneros Group--to pay more than $400 million to the Federation Internationale de Football Assn., international soccer’s governing body.

Executives said it was the largest sum DirecTV Latin America had ever paid for programming. It’s also the first time FIFA has awarded broadcasting rights to a satellite operator in Latin America.

To recoup at least part of that investment, DirecTV hopes to boost sales in and around the countries covered by the deal. That’s both a challenge and an opportunity--in most of these countries, neither cable nor satellite has gained the kind of foothold they have in the U.S.

In Mexico, for example, only about 20% of homes with TV sets had signed up for some form of pay-TV service. And although DirecTV executives say they’re capturing a rapidly growing share of the homes that do pay for TV, they put the average across the region at less than 10%.

Satellite analyst Jimmy Schaeffler of Carmel Group, a media research and consulting firm in Carmel-by-the-Sea, Calif., said the biggest issue for DirecTV Latin America is that the service is still in its infancy. Grabbing the “crown jewel” of soccer, he said, should help boost the number of subscribers.

“It’s hard to imagine a better piece of programming for that part of the world,” Schaeffler said.

The deal covers the men’s World Cup competitions in 2002 and 2006, the women’s games in 2003 and tournaments for two groups of younger players in 2001, 2003 and 2005. All told, DirecTV Latin America plans to air more than 500 games.

The company has more than 1.2 million viewers in 27 countries in the Americas and the Caribbean, making it the largest pay-TV operator in the region, Chairman Kevin N. McGrath said. The World Cup rights, however, extend only to Mexico, Argentina, Colombia, Venezuela, Chile and Uruguay.

Although the deal is exclusive, it requires DirecTV to sell limited rights to local TV and radio broadcasters in those countries. As a consequence, viewers won’t have to sign up for DirecTV to tune in to the men’s World Cup finals, semifinals or preliminary contests involving their countries’ national teams.

What DirecTV will uniquely be able to do, McGrath said, is let subscribers view every game played by all the World Cup teams. It also plans to offer multiple camera angles and other interactive features, as Rupert Murdoch’s Sky Global Networks does on some of its satellite systems.

DirecTV Latin America plans to charge an as-yet-undetermined fee for packages of World Cup games. A similar package of National Football League games has done extremely well for DirecTV in the U.S., Schaeffler said, estimating that more than 1 million of the company’s 9.4 million subscribers had signed up for those games.

What’s ironic about the deal, he added, is that DirecTV was “beating Rupert Murdoch at his own game.” One of Murdoch’s favorite tactics, Schaeffler said, is to acquire exclusive rights to sports programming for his satellite-TV systems around the world.