This article highlights some of the major challenges that have faced the Premier League (PL) over the last few years. It will begin with a short assessment and analysis of the latest domestic PL broadcasting auction, which further entrenched BSkyB’s (Sky) position as the go-to platform for live PL matches in the United Kingdom. Reference will then be made to the consequences of the auction specifically for Sky, ESPN and UK consumers plus an insight into the untimely demise of Setanta.
The rest of the article then looks into two of the main issues presently facing the PL. The first concerns the ongoing threat to Sky by consumers subscribing to non-UK authorised PL feeds from European and non-European broadcasters. The second relates to the threat to subscription TV posed by free online streaming of encrypted content. Both have the impact of reducing demand for Pay-TV in the UK and in turn eroding the value of the PL’s live product.
The recent PL domestic broadcasting auction
In February, news broke that Sky had retained its broadcasting grip in the market for live PL matches for three years from the 2010 season. It was awarded five of the six available packages. There were two auction rounds for this latest auction with Sky winning all four of the first round packages. Two auction packages went to a second bidding round. The PL then announced that Sky had gained further ground on its competitor Setanta by snatching one of the two remaining live packages away from the Irish broadcaster. From the 2010-2013 seasons, Sky will screen five of every six live Premier League games. This converts into 92 games for the 2009-10 season and then 115 games for each of the following three years.
Setanta, who had won two packages in the last auction, were relegated to one package from the 2010 season. Only days after the auction results were announced Setanta’s very future was thrown into doubt; Setanta would have had only 23 games per season to market and promote to its subscribers from 2010-13. The loss of one of the packages to Sky was seen by many analysts as the beginning of Setanta’s financial meltdown. The PL’s decision to reclaim its rights for the 2009-10 season (and subsequent 2010-13 package) after Setanta missed an extended payment deadline, meant that Setanta’s move into administration appeared a mere formality before it was finally confirmed on June 23, 2009. It had been announced only the day before that Disney-owned ESPN had bought the rights to Setanta’s 09-10 package of 46 games and also the 23 matches to be broadcasted from the 2010-13 season.
|Table One: Packages Reclaimed by the PL from Setanta and Re-auctioned and Won by ESPN|
|Type of Package||How many games per season?||Price paid by Setanta per game/total paid|
|Setanta package for the 2009-10 season (Saturday teatime and Monday evenings)||46||£8.5/£392 million|
|Setanta package for the 2010-13 seasons (Saturday teatime)||23||£6.9m/£159 million|
|Table Two: Live PL domestic television auction deal for the 2010-13 season|
|How much was paid?||How many games per season?||Price Per Game|
|Sky||£1.623 billion||115||£14.1 million|
|Setanta1||£159 million||23||£6.9 million|
|ESPN||Information not released||23||Information not released|
*Ent. L.R. 242 It was also announced in February that Match of the Day will stay on the BBC for the next three years in a deal worth a reported £173 million. The original figure Sky and Setanta paid to the PL for these sought-after rights amounted to £1.782bn. Whether this 4 per cent increase on the previous deal is still the case with ESPN coming onboard is unclear because the PL has yet to announce what ESPN has paid. With the foreign broadcasting figures yet to be marketed, any increase on the overall £2.4 billion figure received for the previous three seasons will certainly be greeted with broad smiles from all PL owners, chairmen, managers and players alike.
Why did Sky not bid for all six packages?
The nature and structure of the current PL auction process relates to past European competition law concerns. The European Commission (the Commission) issued a Statement of Objections in 2002. This is usually the first public procedural step taken by the Commission to inform parties that the Commission is of the opinion that breaches of the European competition rules have taken place. The Commission was of the opinion that the way in which PL matches were auctioned (by constraining the number of games available on too few broadcasting platforms) meant consumers were not getting a good deal. After negotiations were held between the PL and the Commission, the PL agreed to certain commitments. These were in place in time for the previous PL broadcasting auction (for games starting from the 2007-08 season). The commitments signed by the PL and the Commission dictated that no single auction bidder could win all six marketed packages. The aim was to ensure that greater access to PL matches was available to more than one broadcaster in the United Kingdom. These PL commitments allowed a second broadcaster (Setanta) to enter a previously Sky dominated market for the first time. ESPN is now only the third broadcaster to have won the right to broadcast live PL matches in the United Kingdom.
Sky had previously argued that the old auction process was adequate because any broadcaster was able to bid for any of the PL auction packages and if Sky happened to be the broadcaster that bid the most, then that was competition working effectively. The Commission retorted that it was because Sky had earned large profits from over a decade as the sole broadcaster of live PL matches that they were in such a position to afford the large sums necessary to win the rights packages. The Commission was keen to make the rights more affordable. This is why the Commission stipulated a single buyer rule, which formed one of the main elements of the commitment package signed by the PL. This was to ensure that that the rights should be split into a number of differentiated live products and at least two broadcasters would have the ability to televise live PL matches in the United Kingdom. While Setanta, as the new broadcasting entrant in 2006, won two packages leaving Sky with only four out of the six packages to market, this latest deal has lead to Sky having the maximum number of matches permissible under the Commission’s commitment agreement with the PL.
Consequences for consumers
The Commission has been keen to ensure that competition law concerns relating to the upstream broadcasting market have been suitably addressed. In ensuring that more than one broadcaster has the ability to show live PL matches in the United Kingdom (through the single buyer prohibition clause in the latest two PL auctions), the Commission has intervened in a market which they considered was not working efficiently and led to distortions in competition.
What perhaps has not been considered to the same extent relates to the downstream, consumer led market. Having more than one broadcaster means multiple broadcast platforms and multiple subscriptions. Previously, only one Sky subscription was required (and supplemental games were on Sky’s pay-per-view channel). With Setanta now broadcasting live PL matches from its channels for the last two seasons, consumers have been given a choice of Sky and Setanta’s exclusive offerings. Now ESPN has taken over Setanta’s PL offerings, its new platform will, no doubt, *Ent. L.R. 243 be subscription based. Choice is usually good but not when it costs more than the old product.
Presumably the doomsday scenario for consumers in Britain would have been Sky, Setanta and ESPN all winning a package. This would have meant that for the first time in live PL history, subscribers would have had to pay three different pay-TV operators to watch a full set of live PL matches. That risk has now evaporated with the news that Sky won five packages with the re-auctioned Setanta package going to ESPN. From both broadcasters’ perspective, it will be interesting to see whether:
- Sky increases the price of its Sky Sports offering to customers to claw back the additional cost of purchasing one more set of live games; and/or
- ESPN’s programming is modelled and priced differently to Setanta’s old channels.
Publicans and piracy
The PL continues to be involved in two important issues that go to the very heart of ensuring and securing the value of live PL football in the United Kingdom. One topic concerns two test cases, involving the publican Karen Murphy and QC Leisure.
Generally, the PL appoints an exclusive broadcaster for a designated country through a domestic auction. Problems have however arisen when a non-UK authorised viewing card and decoder is purchased by a UK publican. Non-UK authorised equipment was sourced, for example, from an authorised broadcaster inGreece. Karen Murphy, a UK publican, would have purchased such equipment through a company like QC Leisure. The PL claims that by purchasing the card and equipment, UK consumers such as Karen Murphy are illegally circumventing the exclusive rights of the PL’s authorised domestic broadcasters. Conversely, UK consumers claim it is their right as European citizens to purchase the cheapest legitimate product from a range of European-wide authorised PL broadcasters.
The cases are of huge significance for the PL and any incumbent UK broadcaster. This is because the repercussions for right holders should the cases go in favour of a publican and a satellite stockist respectively, could change the European landscape for the way right holders sell their valuable products.
In both cases, Mrs Murphy and QC Leisure have been prosecuted. Both cases have been referred to the European Court of Justice (ECJ) because competition law and freedom of movement issues enshrined in the European Treaty require clarification.
Of note is that UEFA, Sky, Setanta, Canal Plus and the Motion Picture Association have all been allowed to intervene in this case in order to participate in the reference to the ECJ. These companies are keen to have their say in the ECJ proceedings because both cases raise questions of fundamental importance to rights holders and broadcasters alike. The question at the heart of the debate is whether a European citizen should be able to scour the entire European Community in order to find the lowest price for live PL football from an authorised PL broadcaster.
Both QC Leisure and Karen Murphy have argued that each exclusive contract negotiated with every authorised PL broadcaster in the European Community infringes European competition and free movement law by:
- restricting the ability of each authorised broadcaster to screen live pictures outside their own PL designated territory; and
- restricting the ability of consumers or companies to either view, or purchase decoders to view, live PL matches from any other source, other than the exclusive national broadcaster.
There is little doubt that a decision siding with QC Leisure and Mrs Murphy would inherently change the way that European broadcasting rights are sold. Far from being the doomsday outcome that right holders fear, five or six complete sets of live PL matches could be auctioned off to various heavyweight pay-TV broadcasters to market on a pan-European basis. This would enable price competition to ensue, as customers could make informed decisions based on the price and quality of the product.
Ultimately, the conflict is between right holders wishing to guard their valuable licensing, copyright and intellectual property rights and fundamental principles of European law. QC Leisure and Mrs Murphy maintain that certain facets of European law, including art.81 of the EC Treaty, safeguard each European citizens’ right to purchase live PL matches from the cheapest provider in the European Community.
While the European courts are having to consider fundamental principles of European law in the above cases, the PL is at war with various internet sites. An emerging challenge to the PL concerns the ease by which internet viewers are able to access live unauthorised PL feeds. This has severe ramifications for subscription based pay-TV services. The impact of reduced demand in the United Kingdom for Sky and ESPN’s feed may well in the medium to long term erode the value that Sky and ESPN’s customers attach to the live PL product. If consumers are able to view live PL matches free of charge instead of paying subscriptions to broadcasters, *Ent. L.R. 244 there will be little incentive for broadcasters to pay huge sums to keep competitions like the PL on their screens. Right holders are obviously extremely concerned.
While most commentators have avoided labelling the pub and QC Leisure cases pure piracy disputes, online copyright infringements, where websites stream live PL match pictures without consent or agreement of the PL, appear to be a more clear cut example of a new generation of unauthorised peer-to-peer or “uni-cast” piracy.
These sites are of concern to the PL and other right holders because the internet sites usually offer the right holders’ content completely free of charge. Right holders are keen to stress that anyone circumventing legitimate subscription based broadcasts to gain access to a live internet stream, is indirectly diminishing the product value. For example, not legitimately paying for live PL games in the United Kingdom may not immediately and directly affect the price at which the PL can sell the rights to its live broadcast but eventually this loss in subscription revenue will be reflected in lower broadcaster bids to obtain rights to show live football. Should PL viewers stop subscribing to pay-TV stations, because a readily substitutable though copyright infringing alternative is available to viewers at little or no cost, such stations may think twice about paying such large sums in the future.
A recent study entitled “Background Report on Digital Piracy of Sporting Events” paints an interesting picture of the widespread level of internet violations. Of note was an audience of 238,000 internet viewers for a PL game in April 2008. Only 13 per cent of the viewers were located in the United Kingdom while the majority (49 per cent) were located in China. It pin-points sites like Justin.tv and peer-to-peer sites like myp2p.eu as providing easy access to copyrighted premium content. In response Justin.tv’s CEO, Michael Siebel, is quick to point out that any copyright infringement would be a violation of Justin.tv policy:
“We follow the guidelines set forth by the DMCA (the Digital Millennium Copyright Act in the US; equivalent measures can be found in the EU in the form of the Copyright Directive and E-Commerce Directive) and take content off the website when requested by a copyright holder. The Premier League is registered with Justin.tv and is actively using the suite of tools [to flag up illegal content] that we provide to copyright holders.”
The PL is at present devoting significant resources to continually monitor websites such as Justin.tv, or others like it such as Ustream.tv and Mogulus. The PL has also been active in pursuing infringing sites like www.footballon.net, www.freepremierleague.com and www.premiershiplive.net. In February 2008 the High Court granted judgments in favour of the PL ordering injunctions against the operators of the three websites. Litigation involving an unauthorised Israeli-registered site offering access to European matches through P2P services was also recently launched. One possible avenue is the “if you can’t beat them, join them” solution. Major League Baseball has a comprehensive internet based subscription service available to purchase for $80 per season. The inherent problem with such a product is that if the same game, or set of games, is easily available free of charge, no one subscribes to the legitimate product. An additional problem for the PL, should they offer an online product to counter the illegal sites, would be the increasing difficulty in segregating national markets (the basis of the above ECJ cases) and may significantly undercut (and annoy!) authorised broadcasters. Additionally, such a product may not be viable especially if the PL has to adhere to UEFA statutes concerning blacked out periods in the United Kingdom. It would appear that right holders fight against copyright infringing websites may well be an entrenched battle.
The problem for right holders and broadcasters alike, is that consumers are using every technological avenue (legitimate or otherwise) to view premium content. The PL’s widespread appeal may ironically diminish its long term value.
The above issues will remain in the background, however, until:
- the ECJ issues its judgment on the QC Leisure and Karen Murphy cases. The implications of the decision will be of fundamental importance to right holders, consumers and football clubs; or
- broadcasters speak out to explain that they will refuse to pay large sums because internet piracy has diminished the value of the product due to dwindling subscriptions and increasing illegal viewers.
Coming up with imaginative ways that right holders can offer better quality online alternatives while protecting their rights through legal proceedings will be one of a number of challenges facing those owning premium content. This two-pronged approach by right holders like the PL can be viewed as one way of maintaining and enhancing the inherent value in their products.
 See Competition: Commission makes commitments from FA Premier League legally binding IP/06/356 Brussels, March 22, 2006.
 See para.3.2 of Commitments of the FAPL (Non-Confidential Version) at http://ec.europa.eu/competition/sectors/sports/decisions.html#mediarights [Accessed June 18, 2009].
 Before the 2004 deal where four packaged rights were all won by Sky, only one package was available which Sky as the incumbent broadcaster had won each time.
 This may ironically give Sky more problems because the current Ofcom pay-TV consultation. Ofcom would now point to Sky having more market power, leading to accusations of dominance and abuse of Sky’s leading position in various upstream and downstream pay-TV markets. See D. Geey and V. Ross, “Ofcom consultation into premium pay-TV content” (2008) 6(10) World Sports Law Report.
 See D. Geey and M. James, “The Premier League-European Commission Broadcasting Negotiations”, ESLJ Vol.4 No.1, at http://www2.warwick.ac.uk/fac/soc/law/elj/eslj/issues/volume4/number1/geey_james/ [Accessed June 18, 2009].
 Previously Setanta and now ESPN would argue that their subscribers are getting much more than just live PL rights for their monthly subscription. Such other sports available on Setanta alongside the PL included the FA Cup,England matches, golf and the IPL.
 It appears that ESPN will be available on Sky’s platform for £9 per month if the subscriber already pays for Sky Sports, and £12 if not.
 This is because of price disparities between high-price countries like the UK and low-price countries like Greece.
 Primarily because the UK broadcasters spend the most amount of money securing the rights for the UK market.
 See FA Premier League v QC Leisure  EWHC 1411 (Ch),  C.M.L.R. 12; and Murphy v Media Protection Service Ltd  EWHC 1666 (Admin),  F.S.R. 33.
 i.e. Sky can only broadcast its exclusive pictures in its allotted UK territory.
 Whether this would lead to an increase or decrease in revenues for the PL is of course speculative and highly debatable.
 Because no fraudulently pirated decoder or card equipment was actually used.
 Unicast technology involves feeds straight from a server to an internet viewer, while peer-to-peer technology involves various internet viewers clustering together and sharing the broadcasting stream with others in that cluster. For more information see the “Background Report on Digital Piracy of Sporting Events” which is available at http://www.allianceagainstiptheft.co.uk/downloads/Sports¨ReportönÏP¨Theft-¨¨November¨2008.doc [Accessed June 18, 2009].
 Various right holders including Universal, Sony and the PL are reported to have helped Lord Carter (with his Digital Britain report) on how to deal with the issue of online piracy.
 See http://www.guardian.co.uk/sport/blog/2008/nov/26/premierleague-bskyb [Accessed June 18, 2009].