Ofcom opens investigation into Premier League TV rights sales

Ofcom will consult supporters’ groups, consumers, media companies and football authorities. Photograph: Graham Turner for the Guardian

 

Ofcom has opened an investigation into the way the Premier League sells its TV rights that could have far-reaching implications, opening up the possibility of live football on a Saturday afternoon for the first time.

The media regulator has opened a competition probe following a complaint by Virgin Media, which claimed a lower proportion of matches (41%) was shown on television in England than in other major European markets and that as a result consumers paid higher prices.

But any substantial increase in the number of matches on offer from the current 154 could require the football authorities to abandon the 2.45pm to 5.15pm broadcasting blackout on Saturday afternoons that has been in place since the 1950s to protect lower-league attendances. Ofcom said it would consult supporters’ groups as well as consumers, media companies and the football authorities over the case.

It said the investigation was still in its early stages and it was too early to say whether there were sufficient grounds to issue an official statement of objections under the Competition Act.

The intervention by Ofcom is unlikely to derail the Premier League’s plans to issue tender documents for its next round of broadcasting contracts, covering the three seasons from 2016-17, early next year. The Premier League will argue that, if the Saturday afternoon blackout is maintained to protect lower-league football, there is little scope to increase the number of matches on offer to broadcasters for policing and logistical reasons.

Under the current deal competition between BSkyB and BT Sport, a new entrant, pushed the overall value of its TV deals at home and overseas to a record £5.5bn over three years. Virgin argues that by effectively limiting the supply of matches the Premier League has inflated the price that broadcasters have to pay and that cost is then passed on to consumers. But the Premier League claims that its approach of dividing the live matches on offer into packages and ensuring that they are sold to at least two broadcasters is consistent with competition law.

The exponential rise in the Premier League’s television income from £191m in 1992 to £5.5bn under the most recent deal, which has largely translated into increased pay packets for players and agents, has faced a series of regulatory and legal challenges down the years. They have included a battle with a Portsmouth pub landlady over the practice of beaming in Premier League matches from abroad and a series of skirmishes between Sky Sports and its rivals over the wholesale prices it charges for its channels.

But most significant was a challenge from the European Commission to the practice of selling the rights exclusively to one broadcaster, under which it also called for the number of games on offer to be increased. After months of bruising negotiation and a threatened legal challenge from the EC, a compromise was negotiated in 2005 under which the Premier League promised to sell the rights to at least two broadcasters.

The then chancellor, Gordon Brown, was instrumental in sealing the compromise deal, which allowed the Premier League to go on playing media giants off one another in an attempt to maximise revenue. Although the deal with the European Commission came to an end after two auctions, the Premier League says it continues to operate under the same principles.

Live top-flight football has been the engine of Sky’s growth over the past two decades but BT Sport, in an attempt by the telecoms giant to increase its share of the broadband market by offering the channel free to subscribers, has posed a major threat to its business model. In the most recent auction BT agreed to pay £738m for 38 matches per season while Sky shelled out £2.3bn for 116 live matches. Since then BT has added the exclusive live rights to Champions League football from next season in a £897m deal.

Tom Mockridge, the Virgin Media chief executive who was formerly a senior figure at Rupert Murdoch’s News International and sat on Sky’s board, welcomed Ofcom’s decision to open the case.

“The fact remains that fans in the UK pay the highest prices in Europe to watch the least amount of football on TV. Now is the right time to look again at the way live rights are sold to make football even more accessible,” he said. “We look forward to working constructively with the Premier League, the wider industry and Ofcom to ensure a better deal for football fans.”

While it is being dressed up as a consumer rights issue, behind the scenes the regulatory and lobbying battle is for market share between several huge media and communications giants.

Ofcom said the views of fans would be taken into account and the Football Supporters’ Federation said that preserving the 3pm blackout was one of the few issues on which it saw eye to eye with the Premier League.

“Our view is that the 3pm window should remain sacrosanct and we’ve got serious reservations about increasing the amount of football on television,” said the FSF chairman, Malcolm Clarke. “The point that needs to be made is that it’s not just a question of passive consumers watching in a different way. Without the fans in the ground, the product for the TV consumer wouldn’t be the same.”

But Virgin Media will point out that only four in 10 top-flight matches, and rarely the biggest clashes, are currently played on a Saturday at 3pm in any case.

In Germany’s Bundesliga all matches are available live and it has not harmed attendances in the either the top flight or the lower leagues.

In parallel with Ofcom’s investigation into the so-called “upstream” issues raised by Virgin, the Competition Appeal Tribunal is considering a long-running legal row over the wholesale price charged for Sky Sports to its rivals that threatens to put Bleak House’s Jarndyce v Jarndyce to shame.

Clarke said that while it backed its case, the Premier League would have more sympathy if it had spent its television riches more wisely.

“The Premier League has got money coming out of its ears and by and large one group of people who haven’t benefited significantly from that are match-going fans,” he said, amid ongoing concern about the ever-rising cost of match tickets and the amount that trickles down to the grassroots.