MEDIA: OFT challenges Sky’s rights - Legal action designed to end the deal between BSkyB and the Premier League could throw into chaos the business of televising other key sporting events. Conor Dignam reports

On January 12 a High Court hearing will begin which could have far-reaching implications for the televising of major sports events in the UK.

On January 12 a High Court hearing will begin which could have

far-reaching implications for the televising of major sports events in

the UK.



The action is the Office of Fair Trading’s case against the Premier

League over the deal which gives BSkyB exclusive TV rights to every live

Premier League football match. The current five-year deal cost BSkyB

pounds 670m for exclusive live rights to all Premier League matches

played each season until 2001, with the BBC paying pounds 73m for the

right to broadcast highlights on Match of the Day.



The OFT’s concern is that the deal has been reached by all 20 Premier

League’s clubs together - effectively acting as a cartel to limit supply

and push up prices.



On the case



The case will be heard by the Restrictive Practices Court and the OFT

has outlined four main areas which it feels are unsatisfactory:



- Unsatisfied consumer demand for televised coverage of Premier League

games (only 60 out of 380 are shown live).



- Restrictive supply (of games and rights) to push up prices.



- One company, BSkyB having a dominant position in the supply of sports

channels in the UK.



- Lack of access to live football coverage impeding the development of

competition in the pay-TV market.



The court has the power to order the Premier League deal with BSkyB to

be terminated immediately or at a given date. Until now attention has

focused on the impact a decision in favour of the OFT would have on

BSkyB and the Premier League. But it could also affect other TV sports

deals already in place.



Simon Johnson, ITV’s head of legal business affairs, said: ’A decision

against the Premier League deal would have massive implications for the

whole business of securing sports rights for television.



’You only have to think of other sports, such as Rugby League, the

Nationwide League or even F1 where there is collective negotiation on

behalf of the sport.



’A ruling against the Premier League-BSkyB deal could create significant

difficulties for both sports and broadcasters.’



It is impossible to exaggerate the importance of Premier League games to

BSkyB. It was football which transformed BSkyB from a company making

losses of pounds 14m a year in 1990 to pre-tax profits of pounds 300m in

1997. But BSkyB has shown the value of football in the era of pay-TV, a

lesson not lost on rivals or the Premier League clubs. With grounds

around the country regularly sold out, there is money to be made from

televising some of the 320 matches per season that are not shown live.

This season the Football League has agreed a deal with Sky to show six

PPV games.



Increasing the stakes



BSkyB knows the clock is ticking. Its bid for Manchester United is an

admission that its domination of live Premier League coverage is

unlikely to last.



If BSkyB can’t have exclusive rights to all the top games, then it can

at least secure a key role by owning one of the world’s biggest football

clubs.



Here too, BSkyB’s bid for United has been referred to the OFT. A

decision is due early next year.



But many, including its rivals, argue that it should be the market

rather than the courts that determine the pace and nature of the changes

in televising Premier League football.



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