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Ofcom Drops Sky and BT Linked Probe into Premier League TV Rights

Monday, August 8th, 2016 (10:24 am) - Score 944

Ofcom’s long running probe into the rising cost of Premier League TV rights (football, rugby etc.), which was started by Virgin Media in 2014 and followed frustration over the impact of a bidding war between BT and Sky (Sky Broadband), has today been closed. But a few positive tweaks are coming.

BT began to break Sky’s dominance of Premier League TV rights with the launch of their new BTSport content in 2013, which offers a wide selection of live TV matches to subscribers of their broadband, mobile, phone and or TV bundles as an included (“free“) bonus. On top of that it’s also possible to get premium EU sport by paying a bit extra (+£6 per month) for the BTSport Pack upgrade.

Unfortunately BT’s effort also created a bidding war with Sky, which was again highlighted by last year’s colossal £5.136bn deal for Premier League TV football rights in the 2016/17 to 2018/19 seasons. Overall Sky won 126 live Premier League matches a season (around £1.39bn per year) and BT secured exclusive live rights to 42 matches (around £320m per season).

All of this has created a culture of rising prices, which is something that neither consumers nor third-party broadcasters of the same content appreciated. In 2014 Virgin Media attempted to tackle this problem head-on by nudging Ofcom to launch an investigation into how the Premier League sells its live TV and related rights for football matches (here).

Virgin claimed that the current approach had resulted in “significant consumer harm” and that part of the problem stemmed from the fact that the proportion of matches made available for live television broadcast under the current Premier League rights deals – at 41% – is lower than some other leading EU leagues, where more matches are available. Solving this, claimed Virgin, might help to tackle the problem of higher prices for consumers.

The bad news is that Ofcom has today closed their investigation, which they said is partly because “significant further work” would be required and their “resources could be used more effectively on other priorities to benefit consumers and competition” (e.g. the DCR Strategic Review), but the next phase of bidding may at least benefit from a few tweaks.

Ofcom’s Statement

The investigation, carried out under the Competition Act 1998, considered whether the selling arrangements of the Premier League restricted or distorted competition.

In closing the investigation, Ofcom has taken into account the Premier League’s recent decision to increase the number of matches available for live broadcast in the UK, to a minimum of 190 per season from the start of the 2019/20 season. This will be an increase of at least 22 matches per season over the number sold for live broadcast in the Premier League’s auction in 2015.

The Premier League’s decision to increase matches available in its next auction for live TV rights builds upon commitments given to the European Commission in 2006.

The next auction will include a ‘no single buyer’ rule, which means that more than one broadcaster must be awarded rights. At least 42 matches per season will be reserved for a second buyer, of which a minimum of 30 will be available for broadcast at the weekend.

The regulator also conducted a consumer survey to understand the preferences of match-going fans and those watching on TV in relation to Premier League matches. The research found that a fifth of fans said they wanted to see more matches televised live and a similar proportion said they were happy with the overall number of matches broadcast live, but wanted to see different matches shown. Another key factor was kick-off time, with two-thirds of fans preferring 3pm on a Saturday.

The outcome means that we can perhaps still expect further price rises after the next batch of Premier League TV rights becomes available, although it remains to be seen whether Sky in particular will bid as highly as they did in 2015.

Tom Mockridge, CEO of Virgin Media, said:

Football fans will now be able to watch more live action on TV. As the only TV provider to offer all the available games, we are pleased that after a two year campaign the Premier League has agreed to offer more TV games.”

In fairness this was already going to be a tough nut to crack because of aggressive but natural competition, where one side is clearly willing to best the other by significantly out-bidding them and thus pushing the prices up for consumers. The new 42 match reservation rule might however help to alleviate some of that.

Leave a Comment
10 Responses
  1. Avatar Steve Jones says:

    Which tends to show Ofcom are absolutely clueless about how to introduce meaningful competition into the content market. In essence, there’s no stomach to make radical changes such as the elimination of monopoly rights.

    1. Avatar New_Londoner says:

      Ofcom does seem to back off in matters concerning Sky, despite an obvious instance of Significant Market Power. No references about structural separation by Ms White this time, how odd!

    2. Mark Jackson Mark Jackson says:

      Not that odd, Premier League TV is a luxury optional service and can’t really be compared with national phone, mobile and broadband services that are now regarded as essential utilities by most people.

      Prem content, it’s a sub-set of the wider Pay TV market and one that is controlled through a very linear model. Don’t get me wrong, it’s a market none the less and I’d like to see more effort to open it up, but equally a different approach may be required.

    3. Avatar karl says:

      If others want the rights to the football they can always buy them.

    4. Avatar Ignition says:

      Ofcom appear happier for us to have a US-type market. Extremely expensive channels funding absurdly high content costs.

      Awful lot relying on people continuing to hand ridiculous amounts per month to Sky and others for football.

      It’s all well and good saying that others can buy the rights but the trouble is they don’t pay, their customers do, and the UK’s obsession with that game means people feel compelled to do so even if it is, clearly, ridiculous.

    5. Avatar karl says:

      The cost is nothing to do with it. That is just the excuse the complainers use.

      F1 is another example the price to the rights of that when the season in FULL switched over to Sky was not significantly more than the rights were the previous year.

      The BBC though refused to foot the bill although they had the prior year, probably because they knew nobody would watch on the BBC and would enjoy Skys coverage complete with the practice sessions the BBC never showed (although its free for anyone to do so, you can even watch F1 practice sessions online) and technical programming explaining changes to cars and the rules.

      Channel 4 which have had highlights and some EU races this year have done an equally terrible job in presenting the programme, they have barely advertised it, adverts mid coverage, presenter that just talk among thereself rather than answering anything you might like to know about the sport and so much more wrong. If you give people a plate of turd or a plate of cake they are gonna take the cake.

      It is not Skys fault they just do better programming both new self made stuff and buying rights to U.S. stuff. Name the last time the BBC or ITV made any significant new 10+ episode season of anything, (excluding that dross they put on Saturday nights of people screeching like cats into a microphone) despite one having a license fee and the other having billions from advertising.

  2. Avatar Steve Jones says:

    @Mark Jackson

    Agreed that Premier League football is optional and isn’t a service so doesn’t require protection like USOs. However, that’s still no reason for allowing exploitation of a monopoly and not introducing some form of controls to prevent it. That’s what is done in Germany. The Telegraph has an article on it today

    http://www.telegraph.co.uk/business/2016/08/08/ofcom-has-been-asking-the-wrong-questions/

    1. Avatar karl says:

      If it is optional and anyone can purchase it then it can not by definition be a monopoly.

    2. Avatar Gadget says:

      “Definition: A market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute.”

      Source: http://economictimes.indiatimes.com/definition/monopoly

    3. Avatar karl says:

      You can get premiership football from Sky, Virgin and even BT, so…
      NOT a single seller

      If you mean the rights holder or owner is a single seller then that would apply to virtually any product on the planet, everything has to come from s single seller initially.

      “In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute..”

      As above Sky are not the sole seller of the goods.

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