Events

Winners & Losers in Football Broadcasting: Some Interesting Implication

Winners & Losers in Football Broadcasting: Some Interesting Implications

Wednesday 2nd March  2011 at 6pm

Lankaster Lecture Theatre (University College London)
Medawar Building,
Malet Place (off Torrington Place),
London WC1
(For directions click here)

Given by: Daniel Geey, Associate in Field Fisher Waterhouse LLP’s Competition and EU Regulatory Law Group.

Synopsis

There are three current football broadcasting matters the resolution of which will go some way to shaping the way football broadcasting rights will be sold in the UK and throughout Europe in the future. Whilst the Advocate General of the European Court of Justice has given her opinion in the Murphy/QC Leisure case, the General Court has also expressed its view regarding the listing of events of national importance. Also on the horizon is the outcome of the UK Competition Appeal Tribunal bundle of cases relating to Ofcom’s investigation into the pay-TV market in the UK which reported in March 2010. In this presentation sport lawyer Daniel Geey explains the inter-linkages between these three matters and outlines some possible implications for sports rights holders and sports broadcasters going forward.

Case 1: Pubcasting

There are currently two cases in which the Premier League (PL) is involved; they relate to Karen Murphy and QC Leisure. Mrs Murphy is a pub owner and QC Leisure is a stockist and supplier of foreign decoders to pubs and the general public in the UK. References have been made to the European Courts of Justice (ECJ) by the English courts because European law issues have arisen that involve the issue of highly lucrative European broadcasting rights.

In both cases, Mrs Murphy and QC Leisure have made representations that the way in which the PL enters into its contracts with various broadcasters throughout the European Union (EU) infringes competition law.  They argue that the PL’s contractual provisions restrict the ability of PL rights holding broadcasters to screen live pictures outside their own designated territory. They also contend that this restricts the capacity of Mrs Murphy or QC Leisure to either view, or purchase decoders to view, live PL matches from any source other than the exclusive national PL rights holding broadcaster (i.e. Sky and ESPN can only broadcast their exclusive pictures in their allotted UK territory).

The PL argues that the system of national Member State restrictions is needed to protect the value that is attached to their product and that the products’ live and exclusive characteristics create the value which has made the PL such a success story.

Some people believe that a decision favouring QC Leisure and Mrs Murphy would completely change the European broadcasting rights landscape. Others may point to this leading to a sea change in the way the PL matches, and other valuable rights, would be auctioned off on an EU-wide basis. It could result in a number of large broadcasters bidding for the same rights and screening them, or sub-licensing them, for screening to all EC households and pubs.

Ultimately, the conflict is between rights holders wishing to guard their valuable licensing and intellectual property rights (which in the PL’s case has brought in billions of pounds since 1992), and the European free movement legislation which safeguards European consumers’ right to purchase live PL matches from the cheapest provider in the EU. It’s certainly not a battle either side is going to give up easily.

With the Advocate General’s Opinion favouring QC Leisure and Mrs Murphy, the ECJ will soon be ruling on whether rights holders will be able to allocate their rights on a territorial basis or if the European Union’s overriding objective is to remove barriers to restrictions on the free movement of goods and services. Should the ECJ believe that the Premier League’s distribution model falls foul of the EU free movement and/or competition rules, new selling arrangements, such as a pan-European rights auction, may have the effect  of consolidating BSkyB’s grip (due to its scale, resources and European wide reach) on the European sports broadcasting market.

The Bosman of the sports broadcasting market may almost be upon us.

Case 2: Listing of Events

The European Union’s Television Without Frontiers Directive, as amended by the Audio Visual Media Services Directive, provides the legal basis for Member States to compile lists of designated events that are of major importance to society, and which so must be broadcast on free-to-air television. In the UK, the BBC, ITV and channels 4 and 5 fall under the definition of free-to-air broadcasters.

The lists must be provided to the Commission which then decides whether the events in question are of major importance to the Member State country and most importantly that the compilation of these lists complies with EC law. In 2007, FIFA challenged the European Commission’s decision that the U.K. and Belgian lists are compatible with Community law.  In separate actions, FIFA and UEFA lodged complaints against the European Commission’s decision to approve the listing of certain ‘crown jewels’ sporting events – the World Cup and the European Championships – drawn up by the UK. Crucially the UK lists all of the World Cup and European Championship finals games collectively as of major cultural importance to the UK.

UEFA challenged the Commission’s decision to approve the UK’s listing of the entire UEFA European Championship final tournament. UEFA stated that the Commission has erred in concluding that matches not involving England, Northern Ireland, Wales or Scotland in the European Championships could be considered as events of major importance for the UK. FIFA have also challenged the listing of World Cup games by both the UK and Belgium. FIFA contended that, in the UK’s case, the Commission failed to state reasons for approving the inclusion of all 64 matches. Their argument included the assertions for the approval of both the Belgian and UK lists that the procedure adopted was not clear or transparent, that not all matches are of importance to the UK or Belgian public and that the list system infringes competition law. FIFA pointed to both lists preventing it from licensing new entrants who wish to use premium sports broadcasting to establish themselves in the European football broadcasting market.

The General Court ruling however stated that the World Cup and European Championships are to be regarded as single events rather than individual games and that individual matches should not be divided up into ‘prime’ or ‘non-prime’ matches.

The outcome will be one of relief for consumers. Arm-chair fans may otherwise have had to pay for a number of the matches that UEFA and FIFA may well have sold to pay-TV broadcasters. Subject to other broadcasters like Channel 4 or 5 bidding for the rights, broadcasters like the BBC or ITV will be extremely pleased that they will able to bid for the full live rights for the two football tournaments. The ruling will have the knock-on effect of insulating free-to-air broadcasters from pay-TV competition. Both FIFA and UEFA can appeal the decision of the General Court. They have up to two months to lodge the appeal. This will obviously depend on whether the rights holders believe they have a reasonable chance of the European Court of Justice overturning the General Court’s decision.

This case continues the same trend (as witnessed in the Advocate General’s Opinion above in the case of Karen Murphy and QC Leisure) of enshrining consumer rights at the expense of the rights holder.

Case 3: Ofcom Decision on the Wholesaling of the Sky Sports 1 & 2 Channels

On the 31st March 2010 it was announced the that UK telecommunicatons industry regulator Ofcom would require BSkyB (Sky) to offer at a wholesale level its Sky Sports 1 and 2 channels at a price determined by Ofcom. This will provide a mechanism for other platform providers to gain access to Sky Sports 1 and 2 on what Ofcom has determined are fair and reasonable terms. The decision will mean, subject to appeals, the wholesale price Sky charges for Sky Sports 1 and 2, to platforms such as Virgin Media or BT, will be reduced by around 10%.

It will most notably affect some of the companies (BT, Top-Up-TV and Virgin Media) that originally made submissions to Ofcom complaining about Sky’s behaviour back in 2007. The decision has been viewed by Sky’s competitors as a victory against a company that they believe – and Ofcom agrees – to have market power in the wholesale distribution and retailing of its Sky Sports channels. Subject to any appeal by Sky, Sky’s competitors will now be able to buy Sky Sports 1 and 2 from Sky at a price set by Ofcom.

Rights holders, especially those who have received large revenues from Sky for their broadcasting rights, are understandably concerned that their largest income source may contract quite significantly due to this ruling as it will force Sky to reduce its wholesale prices for Sky Sports 1 and 2 with a knock-on impact on what it is willing to pay rights holders for broadcasting rights. Sky argues it will not be incentivised to pay millions of pounds for exclusive rights if other platform providers can simply purchase the programmes made by Sky using these rights at knock-down prices.

Unsurprisingly Sky believes competition in the pay-TV market is healthy, consumers are paying a fair price for a product they value and that Virgin, BT and others are being rewarded by Ofcom despite their lack of domestic sporting investment, while Sky has invested billions of pounds into UK sport.

Ofcom’s decision may cause ripples of consternation through the wider broadcasting market too. Some may see this as an isolated case of a targeted market intervention yet could this be the beginning of a more hands-on approach from Ofcom in ensuring, among other things, fair and effective competition?

The Competition Appeal Tribunal (CAT) is at present hearing various appeals in order to decide whether the Ofcom decision was in fact legal.

Reading

Biography:

Daniel is an associate in Field Fisher Waterhouse LLP’s Competition and EU Regulatory Law Group. He advises on Premier League, Football League and UEFA rule compliance and Premier League broadcasting issues and has written various articles for competition, media and sports law journals on the following subjects: European football broadcasting rights, multiple club ownership, European competition law issues relating to broadcasts outside an exclusive territory and third party ownership rights issues stemming from the Tevez decision. He has also lectured at Birkbeck University on the interplay between football, broadcasting and EC competition law as well as on players’ rights in the EC in the field of football.

Contact Details

Daniel also has a website aptly named DanielGeey.com where all of his football law related articles can be accessed. You can follow him on twitter at www.twitter.com/footballlaw.

For further details on this seminar series contact:

Sean Hamil
Department of Management
Birkbeck College
Malet Street
London
WC1E 7HX

Tel: 020-7631 6763
Email: s.hamil@bbk.ac.uk

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