The Spanish regulator CNMC has urged Telefónica to modify its agreement with DAZN so that it is compatible with the commitments acquired in its take-over of DTS (the former Sogecable).
In a statement, CNMC says that in 2015 it authorised the Telefónica /DTS deal subject to a series of commitments related to pay-TV. The recent agreement between Telefónica and DAZN regarding the exclusive rights of Formula 1 for the 2021, 2022 and 2023 seasons could violate some of those commitments.
CNMC analysed whether Telefónica complies with specific aspects of the commitments, namely the wholesale offer of Telefónica’s own premium channels, the minimum guaranteed cost and the acquisition of broadcast rights for channels published by third parties. The agreement implies the sublicence by Telefónica to DAZN of the exclusive broadcasting rights (previously acquired by Telefónica exclusively) of Formula 1 for the 2021, 2022 and 2023 seasons. Furthermore, Telefónica and DAZN have agreed on the conditions in which DAZN will allow Telefónica non-exclusive access to DAZN content, including Formula 1 that Telefónica will offer on its own OTT platform and establishes limitations on the acquisition of these rights by third parties. The contract also establishes the way in which customers who contract packages from Telefónica that access DAZN content (which will be counted as DAZN customers) will be counted.
CNMC says the agreement between Telefónica and DAZN could entail a reduction in the wholesale offer that Telefónica makes available to other operators and a restriction on the agreements that DAZN could reach with other operators to distribute its content
Consequently, the CNMC has declared that Telefónica must make adjustments to the contract in order for the commitments to be fulfilled.
Firstly, Telefónica must modify its contract so that Formula 1 content continues to be included in its wholesale offer and it must ensure that DAZN accesses such content in a non-discriminatory manner.
Secondly, DAZN’s pay-TV customer count must be modified to comply with the commitments regarding the guaranteed minimum cost, and finally the CNMC considers that the clause that limits the possibility of DAZN reaching agreements with third-party operators to freely distribute its content should be deleted.
