3 THE BIDDING PROCESS
15. With Test match cricket sitting squarely in Group
B of the listed events, the ECB were able to issue an invitation
to tender to all broadcasters: they did so on 9 September 2004.[12]
The contract in place at that time dated back to 2001 and was
itself a renewal of the contract won in 1998 by a mix of terrestrial
and non-terrestrial broadcasters, with Channel 4 and BSkyB sharing
live coverage. Under that renewed agreement, the ECB received
£150 million over the three years from 2003 to 2005, with
£59 million representing Channel 4's contribution.[13]
That contract was due to expire at the end of 2005. Bids were
invited for various packages of rights covering all of the ECB's
broadcasting rights portfolio including live television and radio
rights as well as highlights rights to all Test matches, One Day
Internationals, Twenty20 matches and domestic competitions.
16. According to the ECB's written evidence, it divided
the rights into 27 separate packages. They explained that: "The
tender process was crafted in a non-discriminatory way so as to
allow as many broadcasters as possible the opportunity to consider
acquiring the rights to cricket coverage".[14]
Prior to issuing the tender the ECB also held a number of meetings
with broadcasters to explain the bidding process and to hold a
two-way dialogue about its content and structure in order to "create
a competitive bidding process and realistic outcomes for both
the ECB and broadcasters".[15]
17. The BBC, for example, met the ECB on a number
of occasions in 2003 and 2004 to discuss the difficulties it had
with scheduling clashes.[16]
The BBC took the "unprecedented step" of showing the
ECB its forward sport schedule to explore "all possible permutations
to deliver live cricket back onto the BBC".[17]
ITV met the ECB to discuss the tender process.[18]
Channel 4, too, had a number of discussions with the ECB to negotiate
a deal.
18. Ultimately, the ECB received no bids whatsoever
from the BBC or ITV for any televised cricket.[19]
Channel 4 submitted a bid for £54 million for the rights
to the main home Test series from 2006-2009, namely eighteen matches
over the four years of the contract: 4 matches versus Pakistan
in 2006, 4 matches against India in 2007, 5 matches versus South
Africa in 2008 and 5 matches against Australia in 2009.[20]
This equated to roughly 65% of Test matches to be played in
England over the period. BSkyB submitted a bid for the rights
to cover all matches over the 2006-2009 cricket seasons. Unlike
other broadcasters, BSkyB's bid for cricket involved comprehensive
coverage by committing to broadcast "every ball of the Test
and one day international series live".[21]
In addition, it intends to transmit live and in their entirety
a minimum of ten Twenty20 matches plus one quarter final, both
semi-finals and the final of the Twenty20 cup, no fewer than 30
forty-over League matches, the latter stages of the C&G Trophy
and two County Championship matches.[22]
The Committee has agreed, for reasons of commercial confidentiality,
not to release details of the precise monetary figure which constituted
BSkyB's bid. Five was the only broadcaster to bid for a highlights
package.
19. The outcome of the therefore somewhat limited
bidding process was that BSkyB were awarded an exclusive contract
for the broadcasting rights for the seasons 2006-2009. Ofcom
issued a statement on 23 February 2005 confirming that it had
granted consent for BSkyB's exclusive live coverage.[23]
While acknowledging complaints that live coverage would thus
no longer be available free-to-air, Ofcom stated that: "This
is a matter for DCMS which decided in 1998 to place cricket on
the Group B list".[24]
Although it is not one of the generally available channels pursuant
to the Television Broadcasting Regulations 2000, the highlights
package obtained by Five was perfectly in order as none of the
other terrestrial broadcasters had submitted a bid.
20. All free-to-air broadcasters set out their reasons
for not making a bid or, in Channel 4's case, for not submitting
a sufficiently high bid. It appears that the overriding problem
with broadcasting live Test matches on non-specialist channels
is scheduling. The BBC commented: "Each Test Match requires
clearing the BBC's schedule for up to eight hours a day, five
days in a row…In the past, when there were scheduling clashes
such as Wimbledon or the Open, the BBC switched between sports,
failing to fully satisfy fans of either sport".[25]
ITV wrote in their submission that: "The broadcasting of
cricket presents a particular challenge in this regard because
the format of the game (long periods of quasi continuous coverage
with short, frequent, natural 'breaks') does not allow advertising
breaks to be scheduled optimally. The effect…is that it
would not be possible to schedule the same number of advertising
minutes per hour as other sports, or other types of programming.
The current advertising rules…also demand that a certain
period of time elapses between each successive internal advertising
break".[26] ITV
continued: "There are further commercial and scheduling issues
with the unpredictability of cricket, in which there are frequent
delays, over-runs and series not lasting the full number of days".[27]
Andy Duncan, Chief Executive of Channel 4, echoed these sentiments
about scheduling in oral evidence.[28]
But he also added that as cricket is broadcast in the daytime,
it tended to have lower audiences and proportionately older viewers,
both of which factors were less attractive to advertisers.[29]
Despite Channel 4's critically acclaimed coverage over recent
years - acclaim with which this Committee wholeheartedly concurs
- it made a loss of £16 million per annum on its cricket
broadcasting.[30] Given
these circumstances, Channel 4, although wanting to continue with
coverage, felt that it "had to make a bid that reflected
the increasingly competitive environment" in which it operated
and "could not sustain the scale of coverage and resultant
financial losses of recent years".[31]
Hence the decision to scale back the scope of their bid.
21. Whilst we note the difficulties faced by terrestrial
broadcasters in terms of scheduling problems, we lament the fact
that no terrestrial broadcaster (other than Channel 4) sought
fit to bid for any television rights to live cricket; worse still,
that no bid whatsoever was submitted for the highlights package
by any terrestrial broadcaster received by 95% of the population
and which therefore satisfied the criteria for universality.
We believe that free-to-air broadcasters must shoulder some of
the responsibility for the public outcry which followed the decision
by severely limiting the options open to the ECB. Had the BBC,
ITV and Channel 4 all made bids, the ECB could have insisted that
they were not prepared to agree an exclusive deal with anyone.
As it was, the ECB were presented with only two bids.
While we regret the positions adopted by both the BBC and
ITV, we are particularly disappointed by the BBC. ITV has a commercial
decision to take and it is hampered by the difficulties which
cricket poses in terms of maximising revenue from advertisers.
The BBC, by contrast, with its funding by licence fee, can ignore
such concerns and taken together with its public service broadcasting
responsibilities, can only lead us to conclude that it should
have made a bid.
22. Certainly we can find no compelling argument
as to why no broadcaster, other than Five, was prepared to bid
for highlights. The explanation given by Roger Mosey, Director
of Sport at the BBC, that the BBC did not bid as it had assumed
that Channel 4 would win such a competition, even though they
did not in fact submit a bid, does not inspire much confidence
in the BBC's commitment to cricket.[32]
The very fact that Five, which has less onerous public service
broadcasting obligations, a smaller budget and is received by
fewer viewers than its competitors, submitted a successful bid
to show cricket highlights on prime-time television underlines
our disappointment with other free-to-air broadcasters. We applaud
Five's commitment to cricket.
23. Some have argued that the ECB made its decision
far too early and should have waited for the successful Ashes
series to be concluded to maximise the number and financial level
of bids. The Keep Cricket Free Campaign, for one, raised this
as an issue.[33] The
ECB, however, strongly rejected these criticisms and defended
its negotiation stance in its evidence: "It was imperative
that that deal was renegotiated at that time".[34]
Not only were sponsorship deals then being negotiated but leaving
the contract renewal to the very last minute would have heavily
constrained broadcasters who needed to finalise their schedules
well in advance.[35]
David Collier, Chief Executive of the ECB, responded in oral
evidence that: "we have to strike the balance between being
far enough ahead so that people are not constricting themselves
with other contractual arrangements which means that cricket cannot
be shown and knowing exactly how the England team are doing at
the time".[36]
He went on to state that, by the end of 2004, the England team
had in fact won six series in a row.[37]
24. We agree with the ECB's decision to enter
discussions and conclude negotiations well in advance of the conclusion
of the previous contract. It is not for this Committee to
second guess when the rights holders to a particular sport should
put in train the bidding process but, from the evidence we have
received, it seems that the ECB were well within the parameters
of reasonableness to begin the process when they did. Delaying
negotiations until after a potentially disastrous Ashes series
might well have left the ECB in an intolerably weak bargaining
position which, for all who care about the sport, would have been
very damaging.
12 Ev 3 Back
13
Ev 24 Back
14
Ev 3 Back
15
Ibid. Back
16
Ev 19 - In oral evidence, the BBC claimed to have had at least
a dozen meetings with the ECB; Q 39 Ev 31 Back
17
Ev 19 Back
18
Ev 22 Back
19
Ev 19 and Ev 22 Back
20
Ev 25 Back
21
Ev 29 Back
22
Ibid. Back
23
www.ofcom.org.uk/consult/condocs/cricket/bsbcons Back
24
Ibid. Back
25
Ev 19 Back
26
Ev 21 Back
27
Ev 22 Back
28
Q37 Ev 31 Back
29
Ibid. Back
30
Ev 25 Back
31
Ibid. Back
32
Q 43 Ev 32 Back
33
Ev 42 and Q 88 Ev 44 Back
34
Q34 Ev 18 Back
35
Ibid. Back
36
Q 34 Ev 19 Back
37
Ibid. Back
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