House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport First Report

5 THE ECB'S DECISION

39. With Test match cricket no longer in Group A of the listed events, the decision about to whom the broadcasting rights for cricket were to be sold rested solely with the ECB as the governing body for cricket and the owner of the sport's media and broadcasting rights. All with an interest in cricket should recognise that the ECB had to balance a number of important and competing factors. Overriding everything, however, must have been the calculation as to what was best for the long-term interests of the sport.

40. The ECB drew our attention to the fact that few sports are as reliant on broadcasting income as cricket, with some 80% of its total income derived from broadcasting contracts.[60] It stated in evidence: "Being the lifeblood of the game's financial health, broadcasting income provides the funds necessary for ECB to invest in programmes, facilities and initiatives designed to safeguard the future of the game in England and Wales".[61]

41. In 2004 alone, cricket's domestic broadcasting income was £47.4 million.[62] This compares to the £33 million, over four years, when cricket was restricted to Group A listing.[63] David Collier, Chief Executive of the ECB, directly attributed the recent successes of the England teams to the increased income which the sport had received from the sale of broadcasting rights under previous contracts: "the new income generated was reinvested not only in raising the standard of the English international side through the development of the National Academy and the network of county academies that we now have, but were also invested in the grass roots activities more than we had ever done before and that created a massive increase in participation. Because of that, we are now number two in the world".[64]

42. The Committee would like to take this opportunity to congratulate warmly the ECB on its vital role in transforming the fortunes of English cricket over recent years. There can be little doubt that the investment in grass roots cricket, the introduction of central player contracts, the building of world class training facilities and the hiring of first class coaches has played a major role in achieving a resurgence in the fortunes of English cricket. The Committee wholeheartedly supports the ECB's assertion that the results over last summer "could not have been achieved without substantial investment by the ECB".[65] We also concur with its statement that: "this investment was only made possible through the income cricket receives from television",[66] although we note that this investment was made possible from a previous agreement when rights were shared between Channel 4 and BSkyB.

43. The gentleman's agreement reached by Lord Smith and Lord MacLaurin therefore appeared to deliver for everyone with a passion for the game, at least up until the end of 2005 when its intrinsic flaws made it unravel: it enabled cricket to increase its income streams, which in turn led to greater investment at all levels of the game, which in turn has led to the national teams' unrivalled climb through the world rankings. What is more, the gentleman's agreement managed all those changes while retaining a substantial proportion of Test match cricket on free-to-air television.

44. Both David Collier and Richard Caborn argued before us that times had changed since the last broadcasting rights contract was extended in 2003.[67] While admitting that it remained the aspiration of the ECB to obtain a mix of terrestrial and non-terrestrial broadcasters,[68] in the last round of negotiations, the ECB claimed that it was faced with little choice.[69] David Collier summarised the ECB's dilemma: "we are faced with a choice, a stark choice, of an £80 million reduction which would decimate grassroots cricket, which would significantly impact on the success of the England side…It was a very difficult choice to balance, but the choice was: were we going to go back to the bad old days of England probably slipping down the league table from two to eight, with grassroots cricket not being invested in or were we going to take a deal where we could invest at current levels?"[70]

45. The over-arching question which can be distilled from the many competing arguments with which the ECB had to grapple is this: in the long term, how does one best balance the advantages of increased income from broadcasting contracts with all the disadvantages of a reduction in exposure which a non-universal broadcaster will bring?

46. When discussing this aspect of reduced exposure, it is important to consider the facts in terms of viewing figures. Channel 4 provided the Committee with a comparison of live audiences when, under the previous contract, both it and BSkyB had shared coverage of a series. Table 1, below, shows that when Test matches in one series have been shared between Channel 4 and Sky Sports, Channel 4 have achieved average ratings between 3 and 4 times larger than Sky Sports.[71]

Table 1: Comparison of viewing figures for Test series shared between Channel 4 and Sky Sports

Test	Broadcaster	Average ratings	Channel 4:Sky ratio
England v Bangladesh 2005
First Test	Channel 4	688,000
Second Test	Sky Sports	223,000	3.1:1
England v New Zealand 2004
First Test	Channel 4	1,001,000
Second Test	Sky Sports	240,000	4.2:1

Source: BARB, Channel 4 analysis (Broadcasters' Audience Research Board)

In addition, viewing figures for the 2005 Ashes on Channel 4 averaged between 1.5 million and 2.9 million per Test, peaking at 8.4 million during the final Tests last summer.[72] When the BBC last broadcast live Test match cricket, in 1997 and 1998, viewing figures averaged about 1.8 million.[73]

47. By comparison, the number of households which now subscribe to Sky is 8 million[74] out of a total number of households in the UK of approximately 25 million.[75] Of those 8 million, unfortunately it is not possible to determine how many subscribe to Sky Sports as, we are informed by BSkyB, this information is commercially sensitive material. However, this figure will inevitably be considerably less than 8 million.

48. Time and again the ECB explained, both in written and oral evidence, that the difference in the bids it received was £80 million over the 2006-2009 seasons.[76] We cannot verify this figure. What we do know is that its previous contract for the 2003-2005 seasons was worth around £50 million per annum and that, according to the ECB, its current deal is "of no greater value allowing for inflation than the last deal".[77] If we accept those statements, then for the ECB to have accepted a non-exclusive deal with a mix of broadcasters would therefore have resulted in a substantial reduction and such a drop in income would have meant cutbacks in the grass roots programmes and reduced expenditure on the National Academy as well as on the county academies network.[78]

49. The ECB also suggested that the most important factor in promoting interest in cricket generally and in inspiring the next generation of cricketers is the "success of the England team"[79] and without that no role models would be created.[80] David Collier told the Committee that after the announcement of the broadcasting contract with Sky, long-term sponsorship partners had been found and new agreements had been concluded, delivering a minimum of a 5% increase in income.[81] He claimed that broadcasting exposure was important but "the front and back page coverage of the press is something else that is measured very closely by sponsors".[82] He concluded: "the fact is that sponsorship has gone up since the broadcasting deal was struck and…a lot of that is down to the success of the England team".[83]

50. The Keep Cricket Free Campaign argued, however, that the consequences of accepting the BSkyB bid put at risk the long-term financial security of the sport: "by condemning the game to vastly reduced audience exposure, the ECB will not be able to develop many other potential sources of revenue - through broadcast sponsorship, merchandising, endorsement revenues and so forth. With these sources of revenue dwindling, the game will become ever more dependent on broadcast revenue and, correspondingly, in an ever weaker bargaining position".[84] The Campaign also referred, in its evidence, to one estimate which placed the potential value of the lost exposure on terrestrial television at just under £40 million per year.[85]

51. The Campaign acknowledged that the result of their recommendations would lose some income in the short term but contended that: "there is a need to continually renew the sport…by attracting new people to the game and this is a primary consideration".[86] Without free-to-air exposure they claimed that: "hundreds of thousands of young people will lose contact with our national game and local clubs will fail to recruit new players".[87] They echoed the sentiments of a number of members of the public by summarising thus: "In taking the short-term money, the ECB has ensured cricket will be denied the oxygen of the widespread exposure that will attract a new generation to the game".[88]

52. Andy Duncan, Chief Executive of Channel 4, took the following view of the decision which the ECB had to make: "the ECB had a very simple trade-off, but from our point of view the trade-off was sufficient money and exposure for a lot more money and no exposure or much more limited exposure".[89]

53. Analogies with other sports in the UK and international comparisons with cricket governing bodies around the world suggest that the ECB is unique in the approach it has taken. The Keep Cricket Free Campaign argued that no other governing body responsible for a major sport believed that its sport could thrive without free-to-air television.[90] The BBC sought to contrast what has happened in cricket with the diversity of supply found in football. They described football as a "good model" sharing as it does the rights to broadcast different competitions amongst many broadcasters: live Premier League on Sky with highlights on the BBC; live FA Cup and England internationals shared between Sky and the BBC; and the Champions League shared between ITV and Sky.[91]

54. Mr John Grogan, Member for Selby, whose widely-supported Early Day Motion raised parliamentary awareness of the whole issue, submitted that: "cricket will now occupy a unique position in this country as the only major national sport to have sold all rights for all competitions exclusively to a pay-to-view broadcaster".[92] He contrasted cricket with the position of football in the Republic of Ireland where, in 2002, the Irish Government retrospectively created a protected list which included the national team's competitive matches thereby forcing a renegotiation of contracts to allow RTE to show live matches.[93]

55. The Keep Cricket Free Campaign also noted that all other national governing bodies of cricket, or national governments, had taken action to ensure cricket remained free-to-air.[94] One such example cited by the Campaign was the Indian Government which, on 21 October 2005, insisted that pay-TV channels could only broadcast Test cricket involving the Indian team if they shared the feed with the national free-to-air state channel.[95]

56. John Grogan, too, drew the Committee's attention to experience from other countries: in Australia, all cricket Test matches are protected for free-to-air television; and in New Zealand, Sky Sports, despite having the primary rights to all domestic cricket, reached a deal with a free-to-air partner to show live a selection of the main home international matches.[96]

57. As we have mentioned, nearly 100 submissions were received from members of the public, all of which complained about the ECB's decision. The submission we received from the Keep Cricket Free Campaign also included a selection of messages they had received on their website from members of the public aggrieved by the removal of cricket from free-to-air television. Some simply cannot afford a subscription to Sky (the cheapest option by which to obtain Sky Sports currently stands at over £400 per annum[97]); others refuse to subscribe on principle.[98]

58. Sky has introduced offers to assist cricket clubs and their members: a promotional offer exists for members of County and Minor County clubs; and a special reduced rate is in place for cricket clubs to install Sky's services.[99]

59. We acknowledge that the ECB had an extremely difficult decision to make for the future of cricket over the next four years. On the one hand, the Committee agrees that the objective, sought by Lord Smith and Lord MacLaurin, of a mix between free-to-air and pay-TV broadcasters remains attractive today. The Committee strongly supports the notion that a substantial proportion of Test match cricket should be available on free-to-air TV for the benefit of the whole country regardless of a fan's ability to pay. However, the Committee believes that, ultimately, in the debate as to who should decide what is in the best interests of cricket, the judgement has to be left to that sport's governing body. Neither the Government nor this Committee is equipped to make that decision. The ECB should be best placed to weigh what is best for the long-term interests of the sport and to decide on the balance between substantial broadcasting revenue and reduced exposure. It is the ECB, too, who must take the blame for any decline in interest in the game. The duty rests on it to ensure that the potential adverse effects on cricket, referred to in this report, are minimised, if not eliminated, over the years of the exclusive Sky contract. Time will tell if it has made the correct decision and if a new generation of youngsters, enthused by successful English teams, comes forward to emulate their heroes.

60. We have received no compelling evidence in support of cricket returning to Group A of the listed events. Even the Keep Cricket Free Campaign were equivocal in suggesting such a move.[100] The potential damage that re-listing in Group A would do to cricket would be too big a risk to take; the vast sums of money poured into the sport and the achievements of the England teams in recent years would all be put in jeopardy. Having the right to watch Test match cricket on free-to-air television would be of questionable worth if England languished at the bottom of the world rankings, regularly being beaten by the minor cricketing nations.

61. All this said, the Committee takes the firm view that the ECB did not do enough to ensure that a non-exclusive deal was brokered. The Committee believes that a more pro-active approach should have been taken by the ECB to maximise broadcasting revenue while ensuring some cricket remained on terrestrial TV. The ECB should have had more, and placed greater emphasis on obtaining successful outcomes from, discussions with free-to-air broadcasters before the bidding process was put in train and at the outset of, and throughout, negotiations. By allowing BSkyB to think they could obtain an exclusive deal, it is self-evident that the broadcaster would reduce any offer for shared rights and ramp up dramatically its bid for exclusive rights. We do not blame Sky in any way; far from it, that approach makes perfect commercial sense. What we are concerned about is the ECB's timidity in not insisting upon a non-exclusive deal. We acknowledge that they were hampered towards the end of the bidding process by the lack of interest from the BBC and ITV but a clear signal from the outset that an exclusive deal was not on the table may have substantially altered negotiating positions in the ECB's favour.

62. We recommend that the ECB enters discussions at an early stage with all broadcasters to ensure that at the time of the next contract negotiation, there are numerous bids from a variety of broadcasters all of whom will have had ample opportunity to deal effectively with scheduling problems. It is the ECB's stated aim to have a mix of broadcasters wherever possible and we sincerely hope that the next deal manages to meet their aspirations and, perhaps more importantly, the commitments they gave to the Secretary of State for Culture, Media and Sport in 1998. Much of the onus will be on the ECB to ensure that is the case but free-to-air broadcasters too must take up the challenge to help restore live coverage of the game to universally received channels.

63. The Committee received evidence about the suitability of the ECB management board to make decisions in the best interests of cricket. The argument was advanced that the Board contains ten county representatives out of 12 and that as the counties were heavily dependent upon broadcasting income, they would be less inclined to consider arguments regarding exposure.[101] While the Committee notes the evidence it has received, it is outside the scope of this inquiry to consider these arguments in any detail.

60 Ev 1 Back

61 Ev 2 Back

62 Ev 1 Back

63 Q 1 Ev 11 Back

64 Ibid. Back

65 Ev 1 Back

66 Ibid. Back

67 Qq 1 and 2 Ev 11; Q 104 Ev 54 Back

68 Q 2 Ev 12 Back

69 Q 18 Ev 16 Back

70 Q 20 Ev 16 Back

71 Ev 26 Back