UPD Virgin Media Stokes Feud with BT and Sky Over Premier League TV Costs

Cable operator Virgin Media has moved from its previously somewhat neutral stance, specifically in the conflict between BSkyB (Sky Broadband) and BT over Premier League TV rights, by lodging an official complaint with Ofcom and pleading for the comms regulator to help stop the costs of related content from getting out of control.

Last year’s launch by BT of FREE TV sport content (BTSport) with their broadband and phone packages, which among other things included exclusive live coverage of many Barclays Premier League football matches, ultimately changed the market and broke BSkyB’s (Sky Broadband) dominance of football and other sporting TV rights.

But the move left Virgin Media stuck in the middle of a difficult battle, which meant that in order to deliver full coverage they needed to agree special TV rights deals with both BT and Sky. Naturally the costs increased and now VM are concerned that the next battle over rights could result in a massive price hike for their customers, which they fear could leave them at a disadvantage.

As a result it’s perhaps little surprise that Virgin Media has called on the communications regulator to investigate.

Brigitte Trafford, Virgin Media’s Corporate Affairs Boss, said:

“The rapidly rising cost of Premier League live broadcast rights means UK fans pay the highest prices in Europe to watch football on TV.”

Ofcoms Statement

“Ofcom can confirm that Virgin Media has submitted a competition complaint about the Premier League. We are considering the complaint, before deciding whether any further action is required.”

Modern football is all about exclusivity and money, much more so than it ever was in the past. Fans only need to take a brief look at the pay-packets of the top players (not to mention many underperforming players!) to see how the trend is rising. It’s become somewhat of a vicious cycle and one that sees clubs happy to get more money in order to keep the trend going and to stay competitive within the UK and Europe.

Unfortunately much of this has been fuelled by the big commercial battles over TV rights, although the Premier League themselves were keen to stress that, “Regulators have examined our rights packaging and sales process in considerable detail in the past and found both of them to be compliant with UK and European competition law.”

Virgin’s official complaint was lodged during the middle of September 2014 and Ofcom are hoping to make a decision on whether or not to conduct a full investigation by the end of November 2014. The difficulty will be with striking the right balance in an area of such aggressive but natural competition, where one side is clearly willing to best the other by significantly out-bidding them and then offering the same content for “free“.

UPDATE 9:31am

Virgin Media has kindly provided us with a little more background. Apparently they has asked Ofcom to open a formal investigation under the Competition Act 1998 into the arrangements by which the FA Premier League sells live UK television rights to its games. Virgin Media considers that “significant consumer harm” resulting from escalating rights costs can be addressed by targeted changes to the way in which live rights are sold, while preserving the benefits of joint selling. A review is required with the next auction imminent and, they claim, a further 60% inflation in costs predicted.

The provider notes that the European Commission, in 2006, found that the collective selling of Premier League television rights infringed Article 101(1) Treaty on the Functioning of the European Union. The FAPL’s auction process was only permitted (under Article 101(3)) following binding commitments given by the Premier League that were intended to: (i) promote competition between broadcasters and at the retail level; and (ii) increase the number of games made available for live broadcast on TV.

These commitments expired in June 2013 and, Virgin claims, have not achieved the required objectives. As a result Ofcom may be able to intervene on the basis of Chapter I of the UK’s 1998 Competition Act and Article 101 of the EC Treaty. Virgin Media now believes that UK viewers pay the highest prices in Europe to watch all available Premier League live matches and apparently the average price is three times higher than for other top leagues.