Ofcom challenge to prices for broadcasting live football matches

The rights to broadcast FA Premier League football matches

The rights to broadcast live matches for the Football Association Premier League are sold on a collective basis by the Premier League with the income being distributed to the clubs.

The role of Ofcom in the United Kingdom television market

The Office of Communications (Ofcom) is the broadcasting regulator for the United Kingdom. They have the power to create codes of practice which must be adhered to by television channels and they have the power to make decisions which are thus binding on the television channels.

Has Ofcom made any recent decisions in relation to the broadcast of live football matches in the United Kingdom?

The television company Sky is the company which owns the rights to the vast majority of the live Premier League fixtures. Accordingly if consumers wish to watch live Premier League football matches they will be required to subscribe to Sky Sports in which to do this.

However, there is another option open to the consumers in the fact that they will be able to subscribe to another form of digital media such as Virgin media whereby many of the Sky channels can be shown.

How are these other services able to show Sky’s channels?

Sky is able to sell these channels to other digital media broadcasters by wholesaling the rights to these channels. This means that packages of these channels are sold by Sky to the other operator meaning that legally the other operator will be able to broadcast the matches.

Who decides on the price by which these channels are sold?

The decision on the price of these channels was originally decided by the company selling the rights to the channels on a wholesale basis – Sky. However, this has recently come under scrutiny from Ofcom who state that a change is required.

Why is this change required?

Ofcom made a decision that the price by which Sky was selling these rights was too high and that these should be offered on a discounted basis.

What was the reasoning behind the decision?

The reasoning behind the decision of Ofcom was that the high prices were restricting the ability of the other digital media operators in buying the rights to show these sky channels. The upshot of this is that the availability of these channels to the end consumers is restricted as the only way they can gain access to these channels is by purchasing Sky. Furthermore if Sky is the only available operator then they are able to charge high subscription prices for individuals who want access to the channels.

Accordingly this has a significant impact on the end consumers.

Was the decision by Ofcom taken on a legal basis?

The decision by Ofcom had legal basis as holding a position on the market in the way in which Sky had been operating and potentially limiting the consumer access to these channels is in breach of the standard principles of competition law.

The legalities surrounding competition law in the United Kingdom are contained within the Competition Act 1998.

Will there be a challenge against the decision of Ofcom?

Sky is to bring a legal challenge against the decision of Ofcom.

On what grounds will this challenge be brought?

The ground on which Sky wishes to challenge the decision of Ofcom is that the decision of Ofcom does not have the desired effect of increasing competition on the market. They claim that it in fact has the opposite effect.

What is the reasoning for this view?

The reasoning for this view is that it will have a negative impact on the ability of sport to attract a fair return on its content. This means that Sky believe the price that it is wholesaling its content at is a fair reflection of the money making capabilities of this content. They believe that return for the content needs to be set at that level in order to justify the investment which they have made.

Is the challenge likely to succeed?

It remains to be seen as to whether or not the challenge is likely to succeed. Often it is extremely difficult for a company that is so dominant on the market to show that its practices are not an abuse of that dominant position.

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