A satellite network popular in Saudi Arabia is delivering without permission sporting events from around the world, undermining a multibillion-dollar television industry in the Middle East and exposing the kingdom’s faltering efforts to protect intellectual property.
The Arabic-language network, called beoutQ, distributes set-top boxes branded with its logo and charges users subscription fees. The network shows Hollywood movies, soccer and NBA games, among other events, without acquiring the rights—a move seen as threatening to upend the business model for sports organizations and broadcasters.
“It sets a very dangerous precedent for other countries,” said Mark Lichtenhein, chairman of the Sports Rights Owners Coalition, a group focused on rights issues that represents most major European sports bodies. “If people think there are no guarantees, that the rights they are buying are not enforceable, they are not going to buy them. The whole business model of sports would unravel very quickly.”
BeoutQ officials couldn’t be reached for comment. On its website, beoutQ says the company is “a partnership between a Cuban company and a Colombian company, which operates in accordance to the regulations of the two countries that considers our activity 100% legal and that is to criminalise monopoly. Investors are from Gulf countries and also include big investors from Cuba and Colombia.”
The potential impact of beoutQ goes beyond sports. The network offers nearly 3,000 channels—in various languages and including all major U.S. networks—and has movies on demand, such as popular 2017 films like “Blade Runner 2049,” “Get Out” and “Dunkirk.”
“What they can do to sports, they can do to entertainment,” said Tom Keaveny, managing director of the Qatar-based TV provider beIN Media Group, which estimates it has lost tens of millions of dollars in revenue because of beoutQ. “No one will pay for content if they can have it for free.” The company has filed legal proceedings in the U.S. against the unnamed operators of beoutQ.
The battle between beoutQ and beIN is intertwined with a diplomatic spat between Saudi Arabia and neighboring Qatar. Last year, Saudi Arabia and its Arab allies broke ties with the tiny Gulf country, citing Doha’s disruptive regional policy. BeoutQ—which stands for “Be out Qatar”—frequently airs anti-Qatar messages, such as criticizing its leadership for supporting Islamist groups.
At the time of the diplomatic rupture, the Saudi-led block imposed a trade embargo on Qatar. It banned Qatari television channels, including those operated by beIN, which owns most sport broadcasting rights in the region.
No new beIN set-top boxes are available in Saudi Arabia. Renewing subscriptions has become harder because transactions with Qatari entities are blocked, providing an opening for beoutQ in the Saudi market.
The Saudi government has declared beoutQ illegal, and authorities have confiscated its set-top boxes, but beIN and sports organizations say not enough is being done. The set-top boxes remain easy to find, selling for 350 Saudi riyals ($93) including a one-year subscription in small electronics shops. On its channels, beoutQ said it is also available elsewhere, including in other Gulf states, Iraq and Jordan.
Developing the sports and entertainment industries is at the core of the Saudi government’s effort to open up its society and move away from a dependence on oil. But the beoutQ operation has deepened concerns about Saudi Arabia’s protection of intellectual property rights among those who can help with that shift.
“Illegal streaming devices and services are a threat to the global creative economy, as well as to the millions of creators around the world who make film and television,” said Stan McCoy, president of the Motion Picture Association of America’s Europe, Middle East, and Africa region.
The office of the U.S. Trade Representative this year included Saudi Arabia on its watch list of countries that fail to provide sufficient protection, citing sectors like pharmaceuticals and pirated software. To address these concerns, the kingdom recently established a government body for enforcing intellectual property rights.
Many sports organizations are putting pressure on Saudi Arabia to take action. An NBA spokesman said the league stands by beIN in its effort to “stop the unauthorized distribution of NBA content on beoutQ.”
On its 10 branded channels, beoutQ airs various sporting events, including soccer and NBA games, most of which is from beIN Sports. Live events are delayed by seconds and include beoutQ’s logo where beIN’s mark usually is.
The English Premier League last month announced plans to start legal proceedings against BeoutQ in Saudi Arabia. Other soccer bodies—including the Spanish soccer league La Liga, FIFA and UEFA—said they are also weighing legal action.
Ahmad Adil, a 29-year-old from Jeddah, said he had no choice but to subscribe to beoutQ in order to watch the recent World Cup. “I have to use beoutQ because there is no other option in you want to watch soccer,” he said. BeIN has the exclusive rights for broadcasts of the World Cup in the Middle East.
Critics point to links between beoutQ and Saudi Arabia. Its website appears to be accessible only in the kingdom; its set-top boxes remain widely available there; and its subscription fees are charged in Saudi riyals.
In addition, Riyadh-based satellite provider Arabsat has been accused by beIN and sports bodies of distributing beoutQ content. A Wall Street Journal reporter in Saudi Arabia connected to beoutQ using an Arabsat satellite dish. In response to a question about its relationship with the pirate network, Arabsat said through its law firm Squire Patton Boggs that it “vehemently denies that beoutQ is using Arabsat frequencies.”
A payment receipt obtained by beIN during legal proceedings in the U.S., show beoutQ’s website is linked to prominent Saudi businessman, Raed Khusheim, chief executive of Selevision, a free-to-air and on-demand digital content provider.
Mr. Khusheim, in an email, said he has “no direct or indirect link” to beoutQ. He said he was a victim of a “smear campaign” launched by beIN and linked to a business dispute with beIN, of which Selevision used to be the primary distributor in Saudi Arabia. BeIN dismissed the accusation as baseless.
—Donna Abdulaziz and Joe Flint contributed to this article.
Write to Margherita Stancati at margherita.stancati@wsj.com