Premier League Broadcast Rights saga moves toward new chapter

There was no live league football on TV in England until 1983. Between 1983 and 1992 a relatively small number of games were sold by the Football League to the two main terrestrial channels, ITV and BBC. The last such contract, between 1988 and 1992, exclusively with ITV, was to show 18 games per season for £11m per season. Then came the Premier League breakaway, the only purpose of which was to give the top division control of the broadcast rights, which were sold to the new satellite TV provider, Sky. In 1992 Sky’s 5 year contract was worth £49m per season to show 60 games per season. more games, but now sold as premium pay TV content rather than free-to-air. In about 1995 the UK antitrust enforcement agency, the Office of Fair Trading (OFT), started investigating the deal. the OFT objected to the principles of collective selling and exclusivity, claiming that they distorted the market for premium sports rights and the downstream broadcast market.

Since 1992, the Premier League has continued to renew its contract with Sky, the value of which is currently about £333m per year for 138 games. Since 1995 the antitrust authorities have maintained a steady stream of complaints. The OFT lost a court case in the UK in 1999, where it was held that collective selling and exclusivity were pro-competitive. In 2002 the European Commission started antitrust proceedings against the Premier League, which led to an agreement that at least some games should be made available to a broadcaster other than Sky. In the event, Sky offered 8 games for sale and no broadcaster was willing to meet Sky’s reserve price.

The current Sky contract expires at the end of the 2006/07 season, and the Premier League is preparing to tender the rights for the season 2007/08 onwards. The European Commission has tried to obtain undertakings from the Premier League that it will permit a significant fraction of games to go to a rival broadcaster, but negotiations seem to have broken down, and so the Commission is preparing another “Statement of Objections“, which triggers a full antitrust inquiry.

The economics of this is pretty involved, since it deals with two markets: premium football (or however you like to define the market for the games themselves) and the downstream market for broadcast channels, an issue complicated by the proliferation of broadcast platforms. But for those not familiar with the EU sports law landscape, you need to know that there is no antitrust exemption for collective selling as in the US. In the end, the key antitrust issues are the welfare impacts of collective selling and exclusivity.

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Author: Stefan Szymanski

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