EU court case could herald TV sports rights revolution

Football pub Picnik.jpg

Broadcasters cannot prevent consumers in the UK from using cheaper foreign satellite TV equipment to watch Premier League football matches as this breaches EU law, an adviser to Europe's highest court said yesterday (3 February), paving the way for a potential revolution in the sale of media sports rights in Europe.

The European Court of Justice (ECJ) was advised yesterday (3 February) to rule that EU law does not prohibit pubs in Britain from showing live Premier League matches from foreign broadcasters.

ECJ Advocate-General Juliane Kokott issued a non-binding opinion arguing that banning foreign broadcasts breached EU laws governing the bloc's single market.

Karen Murphy, landlady of the Red, White and Blue pub in the southern English coastal city of Portsmouth, uses a Greek decoder card to show live Premier League matches broadcast by Hellenic company Nova.

A subscription to Nova is much cheaper than a subscription to Sky or ESPN, which hold exclusive broadcast rights to live Premier League football in the UK (see 'Background').

The 'Football Association Premier League Ltd.' (FAPL), a private company set up to represent the broadcasting interests of the top tier's 20 clubs, sells exclusive TV rights to broadcasters across Europe on a territory-by-territory basis.

Enforcers acting for FAPL prosecuted Murphy for showing matches on Nova in her pub. She was convicted – and fined £8,000 plus costs – on the basis that only games broadcast by Sky or ESPN could be shown in the UK.

Murphy subsequently decided to take her case to the European court.

Kokott's opinion sought to address the issue of whether a rights holder such as the Premier League can license its content on a country-by-country basis, allowing it to fully maximise the value of its rights, as it currently does.

Territorial exclusivity agreements 'contrary to European law'

"Territorial exclusivity agreements relating to transmission of football matches are contrary to European Union law," reads Kokott's opinion.

"[The] exclusivity rights in question have the effect of partitioning the internal market into quite separate national markets, something which constitutes a serious impairment of the freedom to provide services," Kokott said.

"The freedom to provide services is also in line with the Satellite and Cable Directive and with European competition law. Equally, neither does the Conditional Access Directive constitute a barrier to the use of foreign decoder cards," she decided.

Kokott rejected a copyright argument put forward by the Premier League that it held exclusive rights to matches broadcast to the public. "There are no comprehensive rights which protect the communication of a broadcast to the public where no entrance fee is charged," she said.

The Premier League reacted to the advocate-general's opinion by declaring that if the European Commission wanted to create a pan-European licensing model for sports, film and music then it must go through the proper consultative and legislative processes rather than use the courts.

"The ECJ is there to enforce the law, not change it," the Premier League stated.

Kokott's opinion is not binding on the Court of Justice and its judges will now consider their own verdict in "complete independence," said the ECJ in a statement. "Judgementwill be given at a later date," the court said.

The Premier League also urged the ECJ, which is expected to rule on the case in the next few months, to do so in a manner that would "help promote, celebrate and develop the cultural differences within the EU".

Judges typically back the advocate-general in the vast majority of cases before the ECJ. 

If they back Kokott this time, soon it may no longer be possible to sell live sport or movies on an exclusive country-by-country basis within the EU. 

Yesterday's developments could threaten funding for grassroots sport, warned UK Conservative MEP Emma McClarkin, spokesperson on sports issues for the European Conservatives and Reformists (ECR) group in the European Parliament.

"This opinion is far more complicated than a simple David vs. Goliath battle. Money generated from television rights to sports is funnelled back into grassroots development, particularly in cricket and rugby," McClarkin said.

"These are national football leagues that are being broadcast, and they should be subjected to national territorial rights agreements. The European Commission has made it clear that sport is a separate and specific area, and the court has failed to recognise the specificity of sport. This could have consequences on the quality of national sport broadcasting," she warned.

"Once again, we are seeing the European Court of Justice taking the most federalist interpretation of the law, and this time the consequences will be very far-reaching for television and sports rights owners and for all levels of sport," McClarkin concluded.

UK Labour MEP Stephen Hughes, a vice-president of the Socialists & Democrats (S&D) group in the European Parliament, said: "This case may have the same impact on sport as the well-known Bosman ruling, leading football teams to rethink their business model. Football teams cannot play the victim's role: they will still be able to afford stars like [Fernando] Torres, but hopefully not for €60 million".

Another S&D group vice-president, Spanish MEP Maria Badia i Cutchet, said: "We now have to wait for the court's final ruling, but if it backs the opinion of the Advocate-General it would allow football fans to fully enjoy the benefit of having a single European market and cheer to a United Europe."

"This case could produce a waterfall effect on the TV market. Our group will closely follow the outcome and put pressure on the European Commission to ensure that EU citizens have wider and easier access to European TV services," said Badia i Cutchet, S&D spokeswoman on communication issues. 

The Premier League said Kokott's opinion would "damage the interests of broadcasters and viewers of Premier League football across the EU".

It said the advocate-general's view did not appear to be compatible with the "existing body of EU case law".

"The opinion expressed by Advocate-General Kokott may reflect a particular policy view in relation to the provision of audiovisual services throughout the EU," the League said.

"However, if her opinion were to be reflected in the ECJ's judgement, it would prevent rights holders across Europe from marketing their rights in a way which meets demand from broadcasters whose clear preference is to acquire, and pay for, exclusive rights within their own territory only and to use those rights to create services which satisfy the cultural preferences of their viewers within that territory," the Premier League stated.

Monique Goyens, director-general of European consumers' organisation BEUC, told EURACTIV that "today's ECJ Advocate-General opinion sends a strong signal that the current system of territorial licensing flouts EU law and restricts access to content for consumers. It demonstrates that restrictive licensing schemes run contrary to the notion of the Single Market."

"The Commission is currently addressing the thorny issue of copyright licensing and we hope that the current proposal will duly respond to European consumers' demands for access to content," Goyens added. 

If the advocate-general's opinion is upheld by the ECJ, investment bank Jefferies believes the Premier League may have to look to offer a sweetener, such as international broadcasting rights, for a nominal amount to BSkyB to keep the value of its deal up.

Jefferies claims BSkyB makes about £200m a year in revenue from selling subscriptions to pubs and other commercial premises in the UK.

However, Jefferies only sees about £60m to £70m "at risk" if landlords were eventually able to buy cheaper Premier League coverage from overseas.

"Not all subscriptions are primarily driven by English Premier League [matches], but it remains a significant attraction for some of Sky's 44,000 pubs, clubs and office subscribers," the investment bank told the Guardian newspaper.

Becket McGrath, a partner in EU and competition at law firm Edwards Angell Palmer & Dodge, told the Guardian: "If followed by the full court, this opinion has serious implications for the Premier League and Sky.

"In the short term, Sky will face more defections from subscribers to foreign sources of Premier League football. In the longer term, the Premier League is likely to receive less money when it next auctions off its TV rights, as no bidder will be prepared to offer as much for UK rights. It may ultimately be forced to abandon territorial licensing all together," McGrath said. 

Pressure from the European Commission's competition department has already forced the Premier League to offer its live matches in the UK to more than one broadcaster instead of renewing the exclusive deals it had held with Sky Sports – a subsidiary of BSkyB – since 1992.

Sky has pumped billions of pounds into English football and the money it has given to Premier League clubs has allowed them to buy many of the world's best players.

The Premier League's current three-year deal with BSkyB in the UK is worth £1.6 billion. It is also believed to have made over £1bn in TV deals for rights outside the UK in markets like Hong Kong, Singapore, the Middle East and North Africa, where demand for top-flight English football is exploding. 

Rival packages were first offered by Irish firm Setanta, but its UK arm soon went bust, giving US giant ESPN the chance to fill the void it left behind. 

  • The ECJ is expected to rule on Murphy's case within months. 

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