In 2018, the auction for the assignment of Serie A rights for the 2018/2021 three-year period ended following the publication of call for tenders in spring 2017.
The Mediaset Premium position during this process complied with the guidelines of the five-year plan presented in London in 2017, taking a prudent approach to offers that made the business pay sustainable over the years. During the process it was clear from the start of the year that the League wanted assign exclusive packages and not distribution platforms, as had been the case previously. This decision obviously excluded Mediaset Premium from the auction, following an assessment that the eventual assigned package would be non-sustainable.
In parallel with this process and, in light of the above, negotiations began with SKY who were interested in launching their own product on DTT. On 30 March 2018, an agreement was reached with SKY that provided for the creation of a single platform on DTT, managed by Premium, which could offer services to operators wishing to launch a product on the platform.
The agreement also provided for an option in favour of Mediaset Premium to sell the platform to SKY during 2018, exercisable by October of the same year.
Therefore, a new company R2 Srl, 100% owned by Mediaset Premium , was created to undertake the necessary platform management activities and at the same time a service contract was signed for the emerging SKY offer on DTT.
The agreement with SKY also provided for both the exclusive distribution of the Premium cinema and series under Sky?s satellite offer and the non-exclusive distribution of those channels under the DTT offer, with an option in favour of Mediaset Premium for exclusive distribution rights to DTT.
In June, the Serie A auction ended with the assignment of the rights for exclusive packages, as expected, and with the assignment of these packages to two operators: SKY and DAZN.
Premium consequently did not hold onto Football rights for the next three years, having lost the rights competition for the UEFA Champions League in 2017.
Football has always been Premium's strongest content and a central part of the offering since the launch of the Premium offering; therefore, the lack of football led to a rethink of the offer and an attempt at agreements with the package bid winners for redistribution rights.
In July 2018, Mediaset Premium reached a commercial agreement with DAZN which provided for the possibility of including this service within the Premium commercial offer. As a result, from 1 August 2018, Premium restructured its commercial offer, repositioning all customers on 2 packages: Cinema & TV Series and cinema & TV Series +DAZN.
Proper customer base management and keeping customer's constantly informed as to the progress of all Premium activities and agreements resulted in a slowdown in expected customer cancellations, which had been expected to be much greater given the lack of a football offering compared to previous years. Retaining the customer base brought significant benefits in terms of revenues for the year.
In October 2018, Mediaset Premium exercised the option in its favour and, with effect from 1 December 2018, R2 was sold to SKY. A service contract was signed between R2 and Mediaset Premium for the management of all necessary platform activities for the existing commercial offering. At the end of December 2018, the option on the Cinema and Serie channels was also exercised, with effect from June 2019. At the same time, SKY was also notified of the wish not to extend the service contract beyond 31 May 2019.
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