Investment, Media Rights, Politics & Governance, Security and Integrity

Not backing down: BeIN CEO Yousef Al-Obaidly on the uncomfortable truth of sports broadcast piracy

In one of his first interviews as BeIN Media Group chief executive, Yousef Al-Obaidly explains why the media rights bubble is about to burst, and opens up about trying to keep a US$15 billion portfolio of sports rights from the clutches of a state-backed piracy operation.

by Sam Carp
Not backing down: BeIN CEO Yousef Al-Obaidly on the uncomfortable truth of sports broadcast piracy

Yousef Al-Obaidly is not afraid to admit that 2019 was far from routine, but he is focusing on the positives.

“It has been a very tough year,” he acknowledges, speaking in late December, “but a huge year that is very positive, despite the enormous and unique challenges we have faced unlike other businesses. Most companies would have failed, and we actually got stronger in a really tough situation.”

Al-Obaidly can be a difficult man to track down, but that is perhaps unsurprising when you attempt to untangle the hulking business he has helmed for just over a year. Promoted to the role of chief executive of Qatar-based BeIN Media Group in November 2018, Al-Obaidly oversees a broadcasting juggernaut operating in 43 countries – its presence spans the Middle East and North Africa (MENA), France, the USA, Canada and 11 territories in the Asia-Pacific region - and one that has spent some US$15 billion on a lavish portfolio of sports rights.

It is from Turkey – home to BeIN-owned satellite provider Digiturk - where Al-Obaidly is eventually able to speak with SportsPro to look back on a year that saw BeIN Sports – the company’s flagship sports network – secure further multi-million dollar rights contracts and deliver its usual slate of major events, including the Fifa Women’s World Cup and the Fifa Club World Cup, for which it was the host broadcaster. Among other things, there was also time at the end of 2019 for the wider group to sell a minority 49 per cent stake in Miramax, its American film and entertainment company, to ViacomCBS for a cool US$375 million.

BeoutQ's piracy operation knows no bounds

“If we look at the things we have been doing in year one, we are truly global,” notes Al-Obaidly, who spearheaded BeIN’s international expansion in his previous guise as deputy chief executive. “We are not only a MENA business – a lot of people think we are sports and MENA in short, but there are a lot of things that we have been doing across the globe.”

It would be fair to say, though, that of the challenges to which Al-Obaidly refers, one has been quite unlike any other previously confronted by a broadcaster. Saudi Arabia-backed piracy operation BeoutQ - or “one of the biggest issues that has faced our sports and entertainment industry”, as Al-Obaidly describes it - has been an unwelcome distraction for BeIN for well over two years, a parasite the company has struggled to contain as it has slowly infected various strands of its business.

BeIN claimed in a lawsuit filed against Saudi Arabia in October 2018 that the theft of its content by BeoutQ had caused it US$1 billion in damages - a figure that will now amount to considerably more. A few months later, in June 2019, the company laid off a fifth of its workforce in Qatar, citing a downturn in revenues that could be traced back to the brazen bootlegging operation.

With BeoutQ chipping away at the very core of BeIN’s business, it is tempting to label Al-Obaidly’s job as one of the most testing, perhaps even intimidating, in sports broadcasting – not that it sounds like he was deterred when Nasser Al-Khelaifi, the company’s chairman, asked his compatriot to succeed him in the role.

“You want to challenge yourself and make your industry better,” says Al-Obaidly, in what is his first interview with an English-language publication as BeIN chief executive. “You want to put your own stamp on it, make it better. It’s only the beginning, and it’s really the most exciting thing.

“Of course, as a chief executive, certain hurdles will come your way, but you have to overcome them and you have to fight them, and you have to do what you can collectively with your team. I think we are maturing as a management team, the issues we have navigated are completely unique. We have to run a global business, and you have this big thing in the background of BeoutQ. I cannot think of a CEO in the industry who probably faces as many challenges as we have, [including] the attempt of the theft of our entire business by a state.”

The endless growth of sports rights is over. Some rights holders might get lucky in some markets, but I think the majority of them will see a decline

 Yousef Al-Obaidly was appointed BeIN chief executive in 2018

Born in 2017 out of a wider diplomatic row in the Middle East – one which saw BeIN banned in Saudi Arabia – BeoutQ originally transmitted ten encrypted channels via Riyadh-based satellite operator Arabsat, offering access to all of BeIN’s premium sports content, ranging from the 2018 Fifa World Cup to Formula One motor racing - and everything in between.

Even now, the situation remains far from a resolution. In an ideal world, Al-Obaidly says, BeIN “should be allowed to operate” in Saudi Arabia and that “the rule of law should also be respected”. He adds that BeoutQ set-top boxes “need to be confiscated” and “those responsible, including Arabsat, should be held accountable”.

However, Al-Obaidly reveals that while BeoutQ is now down from satellites, its IPTV-enabled boxes - which provide access to virtually every sports and entertainment channel around the world - “remain out there and still functional”.

“Basically it’s like changing your car from an automatic to manual,” he adds.

To illustrate that analogy, shortly after this interview, SportsPro is sent a video demonstrating how it took a little under a minute to access French pay-TV broadcaster RMC Sport’s coverage of December’s world heavyweight title fight between Anthony Joshua and Andy Ruiz Jr using a BeoutQ box with an internet connection. If nothing else, it makes clear that what was once considered a BeIN problem now runs far deeper.

That, as a matter of fact, is something BeIN - and Al-Obaidly in particular - has been trying to emphasise for some time. Described by those close to him as someone who quietly goes about his business, Al-Obaidly remains notably unflustered when discussing something that has no doubt caused him significant headaches. He notes that BeIN has “fought on behalf of the whole industry to try to end” BeoutQ, claiming that the saga “went completely ignored for a year”.

Since its inception, though, BeIN Sports has hardly been subtle in its aspirations, quickly hoovering up premium rights in major markets and sometimes courting controversy in the process. In response to BeoutQ, then, it has been little surprise to see the company take every opportunity to make its voice heard in an attempt to stir industry action against the Saudi operation.

Indeed, it was Al-Obaidly who famously made headlines in October during a rare public appearance at a sports business conference in London. It was then that he delivered the sobering news that “the glorious media rights bubble is about to burst”, telling a room full of decision-makers that the pillars upon which the industry has grown in recent years are being eroded.

“I’m a true believer of that and I was very vocal about that during my speech,” Al-Obaidly says now. “The endless growth of sports rights is over – some rights holders might get lucky in some markets, but I think the majority of them will see a decline. In certain cases rights values are going to drop off completely, and I think the economic model of our industry will be changed.

“I always find fascinating when you go to the negotiating table and people tell you, ‘we have the West Coast company and they will be very competitive’. If we have seen it, and we have seen it slightly, I think they will be very disappointed – we’re not there yet.

“If you look at customers, whether they’re young or old, they’re accessing everything for nothing. Today, wherever they are, this behaviour has been completely normalised, and it’s just a habit of people accessing content. And with the internet, it’s just going to continue for people to access content for nothing, or almost for free.”

Al-Obaidly hails the support of the Premier League in the fight against piracy

Some rights holders, however, are not heeding that advice. As well as Eddie Hearn’s Matchroom Boxing, which took the decision to stage the Joshua-Ruiz rematch in Diriyah, Al-Obaidly is quick to call out Italian soccer’s Serie A and the Spanish Football Federation (RFEF), both of which have taken their Super Cup competitions to Saudi Arabia in recent months. The end of 2019 brought with it confirmation that yet more sporting events will be taking place in the country over the coming year, including a Ladies European Tour (LET) golf event and a five-stage cycling race organised by the Amaury Sport Organisation (ASO), promoter of the Tour de France.

For Al-Obaidly, there is no logic in a rights holder accepting a big pay day for staging an event in the very country that is eating away at the value of its media rights.

“We are only as strong as the weakest link,” he says. “Some rights holders do nothing, and they see more money in their parties and social activities than their anti-piracy initiatives. You look at Serie A and the Spanish FA, I find it really fascinating that they enter the same country that is doing the piracy.”

Others, Al-Obaidly points out, are at least setting a better example.

“Yes, there’s hopes, and I think the Premier League and La Liga have been really outstanding rights holders in [combating] both BeoutQ and piracy in general,” he declares. “I believe both organisations have secured big enforcement victories in recent months, they have taken ownership, and I think everybody should do that.

“What the Premier League and La Liga have really both understood is that live sport value is delivered in the seconds and not the minutes and the hours – we just don’t have time. You either make your money now or you don’t make money, it’s as simple as that. And that’s why people should try to immediately close these pirate sites, not to wait until 45 minutes, because the damage has already been done if we wait.”

We are only as strong as the weakest link. Some rights holders do nothing, and they see more money in their parties and social activities than their anti-piracy initiatives.

In the case of Serie A, BeIN has made no secret of its disapproval of the league’s relationship with Saudi Arabia, making clear that the Italian soccer body is putting UK£390 million (US$500 million) worth of overseas rights deals with the broadcaster at risk by honouring its contract with Saudi Arabia’s General Sports Authority (GSA).

Serie A, though, is not the only competition to have had its rights deals with BeIN scrutinised by the company. The broadcaster has said for some time that it will reassess how much it spends on live sport, but it is only recently that it has become clearer what that revised strategy might look like.

“Our new strategy is premium, but in proportion,” Al-Obaidly states. “So in the MENA, currently there is no exclusivity, and our offers will reflect that. In many cases we won’t renew, or we will reduce our offer significantly.

“In the rest of the world, I would say that we will bid for premium rights, but very proportionately, because sports rights everywhere are hyper-inflated, especially with digital piracy crumbling the return on investment. France, I would say, is the classic example of a hyper-inflated market: so many competitors, you have four strong players in the market.

“We really relish the competition, [but] the worst thing for our whole industry is to have illegal competition, and by illegal competition, I mean piracy. It’s not fair competition. When you have a fixed business based on the value of rights, it’s the worst. That money actually goes to criminals, and doesn’t go into the system, which affects the grassroots, jobs, and all of that.

“So, we just need to adapt ourselves, ensuring that we are sticking with what we have with a premium, but proportionate based on the market dynamics.”

BeIN has been critical of rights holders staging events in Saudi Arabia

That was very much the message in November, when BeIN won the lion’s share of exclusive rights in France to the Uefa Champions League for three seasons from 2021, at what the company described as a ‘financially disciplined and considered price’.

That deal kicked off a flurry of activity in that particular market, and was soon backed up by a long-term distribution deal with rival pay-TV broadcaster Canal Plus. Then, at the turn of the year, BeIN snaffled rights in France to all 51 Uefa 2020 European Championship games – including 28 exclusive matches - in a deal SportsPro understands to be worth €35 million (US$39 million) – some €25 million (US$27.7 million) less than it paid to show the same tournament in 2016.

Those deals might only make up a small portion of BeIN’s broader business, but viewed in isolation they indicate that the broadcaster’s bids are now based on a rights holder’s approach to protecting its content, as well as what is attractive from a commercial standpoint.

“It’s both, they’re really interlinked,” Al-Obaidly explains. “Previously our decision was maybe driven by the subscriber numbers, and now it’s also driven by the rights holder’s attitude, and the action towards piracy and protecting the rights. Rights holders need to take ownership and stop hiding behind their broadcasters the whole time.

“So, for me, really the two points now in terms of BeIN are interlinked: how do you tackle piracy, but also what is the price - based on your subscribers, your revenue - you want? For example, if a rights holder doesn’t protect its rights, subscriber numbers will also be smaller anyway. So they have to link together now, and the internet is just becoming more and more crucial that everybody has to do a lot more.”

And any rights holder tempted to call BeIN’s bluff need only look at Formula One, which became the first high-profile victim of the BeoutQ stand-off early last year when the Qatari broadcaster opted against renewing its five-year MENA rights contract with the motorsport series.

BeIN recently added Uefa Champions League rights in France

As Al-Obaidly has noted, exclusivity in the MENA region is in short supply, but despite recent efforts to secure the long-term future of its business in France and elsewhere, he is quick to dismiss the notion that the broadcaster is about to pivot away from its home market any time soon.

“Well, I’m from Qatar, I’m from the Middle East, so the Middle East is always going to be the heartbeat of our business,” Al-Obaidly says. “We are looking to grow across the Middle East and North Africa, exploit all the markets and the passion for sport. Other markets are really positive for us, so we will continue to remain global, but the Middle East will always be at the heart and the centre of everything we do.”

Al-Obaidly describes his own country as having “huge, huge ambition” in sport, and is also keen to point out – as he is on several occasions during the interview – that “all roads will lead to Qatar 2022”, when BeIN will broadcast the first-ever edition of the Fifa World Cup to take place in the Middle East. It would be remiss not to mention that the event has been mired in controversy ever since soccer’s global governing body awarded the tournament to the Gulf state in 2010, but Al-Obaidly says his company wants to use the opportunity “to bring the world to Qatar, and Qatar to the world.”

For the time being, though, Al-Obaidly is focused on his second full year as chief executive, one which will see BeIN broadcast the Tokyo 2020 Olympic Games and Euro 2020 in the MENA region, as well as co-present the National Basketball Association’s (NBA) inaugural regular season game in the French capital of Paris. There are also plans to evolve the company’s BeIN Connect over-the-top (OTT) streaming offering and build on new initiatives – namely BeINspired and the BeIN Academy – launched last year. In addition, Al-Obaidly reveals that “some new hires are coming from big, big organisations” to join the company’s management team.

We launched a brand in France in 2012 – look at us now. After a few years we operate in 43 countries over five continents.

“I would say look how far we have come,” he adds, commenting on the rising scale of BeIN’s ambition. “We launched a brand in France in 2012 – look at us now. After a few years we operate in 43 countries over five continents. We produce in nine languages, we are by far the biggest buyer of sports rights and we have a market-leading sports offering in Europe, North America, Asia, Australia and, of course, the Middle East and North Africa. Who else can say that?  We look at the campfire effect that live sports has to bring people together, and we will continue to do that.”

Despite the positives, though, Al-Obaidly remains well aware that the ambition, growth and prosperity of that business could be curbed by BeoutQ and the mushrooming of piracy more generally. For that threat to be subdued, he is calling on the sports business at large to tackle the issue together.

“What the industry needs is a collective effort, it’s not only us,” he declares. “We should quadruple the investment into the anti-piracy infrastructure - I know we invested significantly even to overcome what the technology is, to try more and more to understand. We need to ensure that piracy is a top, top priority for the top management, and really engage the government on that issue, and of course prosecute pirates.

“We should stop hiding behind politics; it’s commercial theft, that much is simple and plain. It has nothing to do with politics, it’s completely, completely commercial theft. We need rights holders to protect their IP, because if they don’t protect their IP, then there is nothing to be commercialised for both the rights holder and the broadcaster.

“We will continue to fight - it’s a fight that is still there and we will do it.”