After FIFA refund, RJR secures new four-year broadcast deal
RJR Communications Group was refunded its US$1.9 million ($220 million) downpayment after losing the exclusive media rights to FIFA events, from 2015 to 2022, to DIRECTV last December.
However, within the last couple of months, the company has secured a four-year deal that entitles it to broadcast all football games, which fall under the umbrella of the international governing body for the world’s most popular sport through to 2018.
Although the new arrangement cuts the investment horizon for a major component of RJR’s sports property in half, two years after it secured the highly sought after content as part of a $1 billion investment in television programming, sports events have had a major impact on the bottom line.
Net profit jumped by 90 per cent in the company’s latest financial year. RJR posted $113 million in earnings for the year to March 2015, compared with $60 million the year before.
Revenue climbed by 11 per cent to $2 billion, while growth in direct expenses was held down – it rose by six per cent over the year to $864 million.
The launch of video-on-demand and online streaming services using over-the-top (OTT) technology also contributed to improved financial performance of the company, according to the board.
“Revenue grew as a result of strategic programming to include the acquisition of local sporting broadcast rights, expansion of online services to include the launch of “One Spot Media” and the continuation of low cost but high quality commercials for non-traditional advertisements for some companies,” said a report to shareholders signed by RJR directors Gary Allen and Lester Spaulding
One Spot Media now has over 27,000 subscribers in several countries, they wrote.
OTT technology enables RJR to provide content to anyone, anywhere in the world as it is delivered over the open Internet, much like YouTube or Netflix.
Consequently, RJR’s audio visual business segment, under which TVJ operates, was where the bulk of the earnings were derived. It raked in $152 million in operating profit for the year, up from $112 million in the prior year, while the radio segment profit climbed from breakeven to $10 million.