EU moves to end TV soccer monopoly
Premier League faces legal challenge to Sky rights
Jane Martinson, media business editor
Monday August 15, 2005
The Guardian
The European commission is preparing legal action against the Premier League after talks over the sale of lucrative television rights for top football games appear to have stalled.
After 18 months of negotiations, commission officials believe the Premiership is dragging its feet over how to open up the sale of the rights to as many competitors as possible. For almost 13 years, dominant satellite group BskyB has owned exclusive rights to televise live Premiership games.
The Competition Commission expressed its frustration to Premiership officials at the end of last month. A spokesman told the Guardian: "We are not satisfied with what they are proposing and we have let them know why we are not satisfied."
A statement of objections pointing out how the current system infringes European competition laws could be issued as early as next month.
The commission is understood to want to limit Sky's ownership to 50% of all live games by the time the next three-year contract starts in 2007. Broadcasters such as ITV, NTL, Telewest and Setanta have all expressed an interest in bidding.
An end to what has effectively been a 13-year monopoly could have a dramatic impact on Sky's business model.
In support of its stance, the commission is expected to publish research by media regulator Ofcom for the first time that is sharply critical of the impact of Sky's exclusivity on consumers. The research found that Sky was seen as too expensive and supporters felt they did not see enough of their own teams - about 25% of all games are broadcast live. Ofcom refused to comment yesterday.
The commission has issued legal proceedings against the Premier League before - at the end of 2002. In reaching a compromise the following year, it stressed that it was unhappy with a single buyer for live TV rights and that it wanted significant movement in time for negotiations over the next contract. Privately, league officials admit that Brussels wants them to "speed up" but they believe doing so could be counterproductive. One source close to the talks said it made sense to wait as long as possible because of the fast-moving nature of the media industry. In particular, the long-delayed merger between NTL and Telewest is expected to result in a more effective competitor to Sky.
Yet this view has been rejected by rivals. One was furious that the Premiership was delaying a deal, saying that such delays favoured the incumbent bidder. "It is in Sky's interests that nothing is decided until the last minute," he said. "The league are planning to delay and delay and delay, until there is no chance of a competitive bid materialising."
A spokesman for the Premier League denied that talks had broken down with Brussels, saying there was simply a hiatus as key people went on holiday. "Discussions are ongoing," he said. "We have been fully engaged in this process and will continue to be so."
The Premier League has argued that the so-called "exclusivity premium" meant that all clubs benefited from more money coming from one broadcaster. Sky and the league have successfully argued in the past that a loss of exclusivity would lead to less money going to clubs.
Exclusivity has also been agreed in other European states, such as France where broadcaster Canal+ recently won the rights to all four packages of live football games.
However, the commission is also expected to argue that the current arrangement in the UK is not as generous as it first appears, largely because of the amount Sky receives from its commercial subscribers. In particular, the UK's 60,000 pubs and clubs are understood to pay almost £200m a year, a large chunk of Sky's £340m a year contract. Sky does not publish details of its commercial revenues but pointed out yesterday that it offers many more games to pubs and clubs than Premiership ones.
Under chief executive James Murdoch, son of Rupert Murdoch, Sky has worked hard to diversify its brand away from the "football and films" that made its name. However, they are still hugely important to subscriber growth. Yesterday Sky said: "We believe we will be in a strong position to bid competitively for whatever rights are available to us."
Haha
Premier League faces legal challenge to Sky rights
Jane Martinson, media business editor
Monday August 15, 2005
The Guardian
The European commission is preparing legal action against the Premier League after talks over the sale of lucrative television rights for top football games appear to have stalled.
After 18 months of negotiations, commission officials believe the Premiership is dragging its feet over how to open up the sale of the rights to as many competitors as possible. For almost 13 years, dominant satellite group BskyB has owned exclusive rights to televise live Premiership games.
The Competition Commission expressed its frustration to Premiership officials at the end of last month. A spokesman told the Guardian: "We are not satisfied with what they are proposing and we have let them know why we are not satisfied."
A statement of objections pointing out how the current system infringes European competition laws could be issued as early as next month.
The commission is understood to want to limit Sky's ownership to 50% of all live games by the time the next three-year contract starts in 2007. Broadcasters such as ITV, NTL, Telewest and Setanta have all expressed an interest in bidding.
An end to what has effectively been a 13-year monopoly could have a dramatic impact on Sky's business model.
In support of its stance, the commission is expected to publish research by media regulator Ofcom for the first time that is sharply critical of the impact of Sky's exclusivity on consumers. The research found that Sky was seen as too expensive and supporters felt they did not see enough of their own teams - about 25% of all games are broadcast live. Ofcom refused to comment yesterday.
The commission has issued legal proceedings against the Premier League before - at the end of 2002. In reaching a compromise the following year, it stressed that it was unhappy with a single buyer for live TV rights and that it wanted significant movement in time for negotiations over the next contract. Privately, league officials admit that Brussels wants them to "speed up" but they believe doing so could be counterproductive. One source close to the talks said it made sense to wait as long as possible because of the fast-moving nature of the media industry. In particular, the long-delayed merger between NTL and Telewest is expected to result in a more effective competitor to Sky.
Yet this view has been rejected by rivals. One was furious that the Premiership was delaying a deal, saying that such delays favoured the incumbent bidder. "It is in Sky's interests that nothing is decided until the last minute," he said. "The league are planning to delay and delay and delay, until there is no chance of a competitive bid materialising."
A spokesman for the Premier League denied that talks had broken down with Brussels, saying there was simply a hiatus as key people went on holiday. "Discussions are ongoing," he said. "We have been fully engaged in this process and will continue to be so."
The Premier League has argued that the so-called "exclusivity premium" meant that all clubs benefited from more money coming from one broadcaster. Sky and the league have successfully argued in the past that a loss of exclusivity would lead to less money going to clubs.
Exclusivity has also been agreed in other European states, such as France where broadcaster Canal+ recently won the rights to all four packages of live football games.
However, the commission is also expected to argue that the current arrangement in the UK is not as generous as it first appears, largely because of the amount Sky receives from its commercial subscribers. In particular, the UK's 60,000 pubs and clubs are understood to pay almost £200m a year, a large chunk of Sky's £340m a year contract. Sky does not publish details of its commercial revenues but pointed out yesterday that it offers many more games to pubs and clubs than Premiership ones.
Under chief executive James Murdoch, son of Rupert Murdoch, Sky has worked hard to diversify its brand away from the "football and films" that made its name. However, they are still hugely important to subscriber growth. Yesterday Sky said: "We believe we will be in a strong position to bid competitively for whatever rights are available to us."
Haha
