Out-Law News | 01 Oct 2014 | 2:32 pm | 3 min. read
The telecoms and pay-TV provider has called on Ofcom to launch an investigation into the way in which UK TV rights for the English Premier League are sold before bidding for the next tranche of rights begins.
At the moment, Sky and BT Sport jointly own the exclusive rights to broadcast Premier League football matches in the UK. The value of the current deal to the clubs is approximately £1 billion a season. The current deal expires at the end of the 2015/16 season and bidding for the next set of rights is expected to begin next year.
Virgin said it expects the value of the new TV rights package to be 60% higher than they are at the moment and said the increasing cost to broadcasters in securing those rights have a knock-on effect on what consumers have to pay to access the coverage.
"The rapidly rising cost of Premier League live broadcast rights means UK fans pay the highest prices in Europe to watch football on TV," Brigitte Trafford, Virgin Media’s chief corporate affairs officer, said in a statement. "Virgin Media has asked Ofcom to investigate how the rights are sold ahead of the next auction."
Virgin said that "targeted changes to the way in which live rights are sold" can address the issue and claimed reforms can be achieved without breaking away from the current 'joint selling' model.
Virgin's request to Ofcom to investigate has been filed under the Competition Act. The Act allows companies to ask competition regulators to probe commercial agreements that they believe may impact on UK trade and "have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom".
Virgin has challenged existing arrangements which sees UK consumers generally have to pay more to access live TV coverage of Premier League football than consumers elsewhere in Europe have to pay to access live TV coverage of matches from their top domestic leagues. In addition, at the moment fewer than half of Premier League matches are made available to be broadcast on UK TV compared to other major European footballing nations, such as Germany, Italy and Spain, where all matches played in the top leagues in those nations are available for live broadcast.
A previous investigation by the European Commission in 2006 resulted in the Premier League having to change the way it awarded TV broadcasting rights to its matches. The changes meant that the rights had to be sold in batches and that no single company could acquire every one of those packages of rights.
The conditions the Commission imposed, which have since expired, were designed to promote competition between broadcasters and result in an increased number of Premier League matches being broadcast in the UK. However, by requesting a formal investigation, Virgin is questioning whether the existing arrangements for the sale of Premier League UK TV rights, although not bound by the previous investigation's conditions, achieve fair competition and protect consumer interests.
Competition law expert Angelique Bret of Pinsent Masons, the law firm behind Out-Law.com, said: "The settlement agreed between the Commission and the Premier League allowed the rights to continue to be sold collectively but in packages to give pay-TV operators the opportunity to make competitive bids for packages of rights. If Ofcom does decide to open a formal investigation, it is not clear how changes to the sales process or to the packages could ensure that a lower price is paid or why this would, ultimately, be in the interests of pay-TV consumers or the sport more generally."
Sports law specialist Trevor Watkins of Pinsent Masons said that any investigation by Ofcom could dissuade potential foreign investors from buying Premier League clubs.
"We are currently seeing an undiminished appetite for investment within Premier League football," Watkins said. "That interest invariably rests on the attractiveness of the lucrative rights deals, global coverage and prestige of the competition - a successful challenge to the sales process would naturally cause potential investors to look more carefully elsewhere."
"The eye watering projected increases in revenue will, however, draw into sharp focus the ongoing debate about how English football is structured, the relationship between Premier League and Football League, and widen the chasm that exists between revenues in the top two leagues of English competition. Whilst offering tremendous opportunities for Premier League clubs, radical change will be needed if we are to continue to see the fabric of relegation and promotion retained as we know it," Watkins said.