Sport set to play major role in roll-out of new technologies

The sports media rights debate is hotting up with
broadcasting deals moving towards shorter contracts, more
packages and a split between TV, internet and 3G rights.
Commission sector inquiries are underway. 

The Commission launched a sector inquiry into the
sale of sports rights and 3G in January
2004 and will launch a second sector inquiry
into the sale of sports rights and the
internet at the end of 2004 / early 2005. One
key reason for a sector-wide approach is
to find out if exclusive sports media rights deals are
hampering competition and thereby restricting
choice/artificially lifting prices for a given product.
Effectively, the Commission wants to smoke out
any anti-competitive commercial arrangements and
conduct that may exist across the whole industry.
It also wants to ensure that new
competition has access to these rights.

The sector inquiry into 3G is a two-step
process. The first step is designed to give the
Commission an overview of the sector via
questionnaires sent out to a sample of 55
companies, be they rights owners, TV operators or mobile
operators. The idea is to assess the importance of sports
rights for 3G and identify types of restrictions in terms
of access imposed by TV broadcasters. The second
step is a questionnaire sent out to other players
and extra questions for the 55 companies which were
targeted in the first instance.

In the past the Commission says anti-competitive
commercial arrangements and conduct has chiefly
taken the form of: 

  • refusals to supply, the bundling of TV rights with
    new media/UMTS (Universal Mobile Telecommunications
    System) rights
  • the existence of embargoes favouring TV coverage
    over new types of coverage
  • the purchase of new media/UMTS rights on an
    exclusive basis.

The Commission came up against some of these
practices when dealing recently with the sale of the
media rights to the UEFA Champions League football
tournament and the sale of the rights to the English and
German premier leagues. In UEFA’s case, following a
careful examination of Champions League broadcasting
rules, the Commission sent a statement of objections to
the organisation on 19 July 2001. 

UEFA now has a new joint selling arrangement whereby,
instead of selling the rights as a bundle to only one
broadcaster per country, it has agreed to sell the
rights in several packages for shorter periods of time.
Individual football clubs will also be able to exploit
some of the rights with their fan base. Internet and
UMTS rights are also included in the deal for the
first time.

 

The 
Commission

is keen to ensure as open access to sports media rights
as possible. Outgoing Competition Commissioner Mario
Monti: "As the launch of 3G networks enters into
full swing and the success of the service weighs heavily
on the operators' ability to deliver attractive
audiovisual content, it is the task of competition
regulators to ensure that access to sports rights remains
open and non-discriminatory."

Dr Richard Haynes, from the 
Stirling Media Research Institute at Stirling
University

, says shorter contracts, more packages and a
distinction between TV, 3G and internet are broad
features of the Commission's approach to the sale of
sports rights. Stephen Morrow, also from Stirling
University, agrees that this is becoming the
established pattern, especially for the 'big
five' [England, France, Germany, Italy and Spain]. He
describes the Commission's approach as
"pragmatic" and says it wants to be seen
as acting in the consumers' interest while taking
into account the nature of the football market. Reacting
to the German Bundesliga deal, Morrow's view is that
"this looks like a pragmatic way forward: some
benefits for consumers certainly in terms of improved
choice via new media, but only within the context of
recognizing that there remain clear economic and sporting
benefits from some collective selling of rights. A
difficult balancing act to continue over the long term I
suspect".

Helen Smith, Co-Managing Director of
Brussels-based 
sports consultancy KEA European Affairs

, is optimistic about the deal "as it confirms that
rights should be parcelled and not sold in one lot. Clubs
can also use the rights themselves as soon as the final
whistle is blown and can sell their home matches to
mobile operators. This helps keep the market open to
competition among broadcasters, mobile and new media
companies although, as we have seen with BSkyB, despite
the Commission’s determination sometimes the
broadcaster still ends up with all the rights, after
tendering". 

She sees it as a win-win situation for big and small
clubs alike but argues that "some analysis of the
impact of the carve-up of broadcast rights for individual
club exploitation at different levels of the game would
be useful". Her view is that "We can see
already a two-speed market where the big get bigger and
small get smaller and it becomes harder and harder for
the smaller clubs to grow and provide effective
competition". 

Dutch MEP Toine Manders

(ALDE), who is a member of the Committee on the Internal
Market and Consumer Protection, was "delighted"
by the Bundesliga deal "as these developments
demonstrate that the internal market rules apply to the
football sector as well as to regular economic
sectors".

Looking to the future, Dr Haynes says "Italy and
Spain have fragmented markets for rights, but the
Commission may well focus on the consolidation of
News Corps interests in Italian pay-TV at some
stage".

The sports media rights market is widely regarded as
being an extremely valuable one subject to a high level
of competition. This is particularly the case in
professional football. Broadcasters are willing to pay
huge sums to secure exclusive rights to major sports
events safe in the knowledge that their audience figures
will subsequently soar. The growing use of new media such
as mobile phones and the internet adds an extra
element to the debate over these rights.

Given the high potential returns, exclusivity has led
broadcasting down the road towards pay-TV as opposed to
free-to-air TV. Public broadcasters cannot afford to pay
huge sums to secure rights so the trend is for
individuals increasingly having to pay extra to watch
their favourite sport.

Football, which is considered to be premium content,
is very much in the limelight after the Commission struck
deals with the German Bundesliga, the  English
Premier League and European football governing body UEFA
on the sale of media rights. One of the features of the
deals is a move towards dividing up TV, 3G and internet
rights. Over time, new media such as 3G mobile technology
and the internet are set to be increasingly used by
EU citizens to watch sports events live or in
the form of highlights.

The Commission said in January that 81% of the EU
population have a mobile phone although there are
currently around 500,000 subscribers of 3G services
in Europe. It added that the service has been introduced
in Sweden, Denmark, the UK, Italy and Austria with 40 new
networks due to be launched in Europe in the next 12
months. The transmission of images and sound from sports
events via mobile handsets is said to be the essential
advantage of 3G networks compared to the previous
generation infrastructure.

  • The results of the Commission sector inquiry into
    the sale of sports rights and 3G are due out in early
    2005.
  • The Commission sector inquiry into the sale of
    sports rights and the internet will be
    launched at the end of 2004 / early 2005. 

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