Turkish TV network Digitürk’s struggle with a $125 million payment on a broadcasting deal, citing a plunge in the lira since it was signed in November 2016, is a reflection of the predicament before many Turkish companies as they face falling lira revenues while confronting dollar-denominated liabilities, wrote Financial Times Turkey correspondent Laura Pitel.
A local subsidiary of Qatari network beIN, Digtürk’s five-year, $2.5 billion contracts signed in 2016 for the rights to air the country’s Super Lig football matches, stipulated that payments, were to be made to the Turkish Football Federation (TFF), half in U.S. dollars and half in lira at a rate fixed at the time, the article explained.
After two years of payments, the company now argues it is facing an “unreasonable squeeze,” due to a 41 percent plunge in the currency since the deal was signed, Pitel wrote, adding that Digitürk is now proposing a level that is significantly lower than the current 5.7 lira to the dollar, as part of a move to reduce the value of the rights deal by tens of millions of dollars.
However, the proposal has not been met well by the TFF or Turkey’s heavily indebted clubs.
“There is a contract,” it quoted Fikret Orman, the chairman of Istanbul soccer club Beşiktaş, who also heads a union of Turkish clubs, as saying this month. “Its conditions, guarantees and duration are laid out.”
It is “plainly unsustainable” for any broadcaster to operate under the terms of the 2016 deal, Digitürk told the Financial Times, adding that it could not “shoulder responsibility for the commercial viability of the league in these unprecedented economic conditions, which are affecting all businesses”.
The dispute has become a rare sign of strain in Qatar-Turkey relations, the article said, among two countries that have built increasingly close ties in recent years.
Qatar, a key regional ally of Ankara, pledged to increase its investments in Turkey at the height of a currency crisis last summer. In August, it agreed a $3 billion currency swap deal with the Turkish central bank to help the country shore up its financial system.
Another issue of contention between the broadcaster and its Qatari owners is the lack of action to prevent piracy, which is affecting subscriber numbers and even causing reluctance by top clubs to provide access to players and managers for post-match interviews, it said.