On 18 November 2014, Ofcom opened an investigation into the Football Association Premier League’s (the “League’s”) joint selling arrangements for the TV rights to its games. The investigation is important as Ofcom has wide powers including the ability to revolutionise how the League’s rights are sold in the UK. Its decision could alter how much consumers pay to view football and on what channels the games are broadcast.
Ofcom are investigating the selling arrangements after a complaint by Virgin Media that the current arrangements are a restriction of competition under Article 101 of the TFEU, the prohibition against anti-competitive agreements. The arrangement is question is a collective selling agreement where the League may collectively sell the rights on behalf of all the Premier League clubs. Virgin Media’s complaint is that only 41% of the matches are currently sold as live meaning a shortage of supply, leading to higher prices. Virgin’s interest in this is because it currently buys the BT and Sky channels which show the matches. The higher prices BT and Sky pay each year, in turn, are raising the wholesale price Virgin have to pay. Virgin allege that as a result of the current arrangement, UK consumers pay the highest monthly cost in Europe for their top flight football viewing.
There is a 2005 European Commission ruling that means football rights in the UK have to split between at least two providers, in the UK this has resulted in BT and Sky bidding against each other. Although the ruling was designed to create competition and lower prices, it has meant that consumers have all ended up paying more, including the added cost of having to pay for multiple services such as buying extra BT channels on their Sky subscription or vice versa. The Commission ruling has now expired meaning the League would no longer have to abide and could sell all rights to BT or Sky alone.
It is hard to see what Ofcom can do to lower consumer prices without taking drastic action. The nuclear option would be to make all games free to air on the BBC or allow some bidding between the games between the free to view channels such as the BBC, ITV and Channels 4 and 5. Such an option is highly unlikely given the pronounced effect it would have on the League and their member clubs which depend heavily upon this income.
A slightly less drastic option would be to follow Virgin’s reasoning concerning the supply of matches and double the supply by allowing the live broadcast of all games. Whilst attendance at games would likely suffer, it is also arguable that an increase in supply may inadvertently raise prices further as BT, Sky and others bid for more games. Equally, it is arguable that any break of the League’s ability to allow collective bargaining would create further price distortions and a loss of control for Ofcom as the larger teams would no doubt ask higher prices for their games. It is hard to see how consumer prices can be effectively regulated without granting a simple cap on the amount a consumer can pay each month for football viewing rights per provider.
Whatever conclusion they reach, it is easier to imagine something closer to the status quo being maintained. BT and Virgin as challengers to Sky are important for the UK broadband and TV markets alike and any large scale shake up of football rights will have a knock on effect throughout the sector. Perhaps the current landscape will become a permanent one and consumers will have to get used to high football viewing fees, albeit in the knowledge that those fees are paying in part for the world’s top players to perform on English grass.