Select Committee on BBC Charter Review Minutes of Evidence


Examination of Witnesses (Questions 1040 - 1059)

TUESDAY 6 DECEMBER 2005

Mr Mike Darcey, Mr Vic Wakeling and Mr Martin Le Jeune

  Q1040  Chairman: I want to bring in Lord Maxton in a moment, but let's get the listed events position absolutely straight. There are listed events at the moment, the Olympic Games, the Grand National, the Derby, the Rugby League and the Challenge Cup Final, but are you basically saying that the listed event system, if it was left to you, would be abolished?

  Mr Darcey: I am not sure what that means really. It is not going to be left to us. I guess if there was a blank sheet of paper, we might not be calling for it.

  Q1041  Chairman: Therefore, that is another way of saying, is it not, that you actually do not want it, that you would like to see it go?

  Mr Darcey: No, I do not think that is quite the same thing. It is not something that exercises our minds day to day. We do not cast our eyes down that set of events and think, "Gosh, we really must tear down this edifice so that we can bid for the Derby". It is just not what we do. I think, as a matter of principle, it is something which just does not sit that comfortably with us, but we do not sit around all day, thinking, "We must bring this to an end".

  Q1042  Chairman: So you are totally relaxed about it?

  Mr Darcey: I think we are pretty relaxed, yes.

  Q1043  Lord Peston: Before we give up on this, I am really very disturbed by what you are saying. The classic case for listed events and other controls on bodies like yours is that the `owners' have monopolies and it is absolutely standard in our country and our economy that if you have a monopoly, like the Premier League, or whoever owns the rights to the Derby, we do not allow you to exploit that monopoly to get as much out of it as you can. The argument of exploiting monopolies is against the national interest. I find it amazing that you, a reputable public firm, are saying, "Yes, we think these monopolies ought to have the opportunity to maximise the revenue from their monopoly". I just find it unbelievable that you are putting that view to us because that is the case for listed events and for other controls on what people—

  Mr Darcey: I am a little perplexed as to what you think is the economic market within which the Derby has a monopoly. Is that the market—

  Q1044  Lord Peston: The market is the controller of the Derby. You see, you cannot come up and say, "Well, there is that Derby and now I've got this Derby, and now that I've got this Derby they can all compete against each other". It is not like selling baked beans. The Derby is a unique event and it is a monopoly. I am not saying you should change your mind, but I am just amazed that you adopt this view as reputable businessmen because, on the whole, the philosophy on which our society is based is that monopoly is bad and where you cannot get an alternative, it needs to be controlled, and that is the listed events position. I am just staggered at the view you are taking. To put it differently, you must have a better argument.

  Mr Darcey: I am trying! Competition law exists to address concerns that arise from monopoly and market power more generally in relevant economic markets. I am not aware that any competition body anywhere in the world has defined the market so narrowly as to be one horse race. Now, if—

  Q1045  Lord Peston: So we are the only place in the world that has listed events?

  Mr Darcey: That is not what I said either. If you were to adopt that rule that said a horse race is a market because it is unique because there is only one Derby, you could adopt that approach and apply it to every single television programme in the United Kingdom. There is only one Simpsons, there is only one Coronation Street, there is only one Hill Street Blues, there is only one individual football game and I think you need an approach that distinguishes—

  Lord Peston: There is clearly no point in discussing it further. You clearly do not understand the economics of any of this.

  Q1046  Lord Maxton: As far as I am concerned, and not the Derby or the Grand National I would accept, but one of the reasons why government policy wants listed events or wants sport on the terrestrial channels at the moment, and I would accept it is at the moment, is of course to get the widest possible audience to encourage participation in that sport, and there are some governing bodies who will take the same view presumably. Let me just ask you, therefore, about the comparative figures, and we will take my sport, if you like. Last Saturday, the PowerGen Cup in rugby was being shown on BBC2. This Saturday, the Heineken Cup will be shown on Sky Sports 1, 2 or 3, I am not sure which one. Can you give us any idea of comparative viewing figures to give us some idea as to whether or not the argument I am making makes any sense in terms of encouraging people to participate in sport by having bigger figures?

  Mr Wakeling: I think it is very important and it goes to answering Lord Holme's question as well, that we do not think we have plateaued, but we think we have a duty actually to encourage more people to play sport, we want them to be involved. I think in our written submission we talk about the younger audience for multi-channel TV and we also run programmes which encourage young people to get involved in sport. We have something very good going on in schools, Living for Sport, into which about £1 million a year is invested. The answer to your question of course is that I do not know the PowerGen Cup figures, I am sorry, for the BBC. Over this weekend, I think we will show seven live matches from the Heineken Cup, plus the Sunday night round-up which shows everything from everywhere and of course—

  Q1047  Lord Maxton: I will be watching it!

  Mr Wakeling: Thank you very much!

  Q1048  Lord Maxton: Or some of it.

  Mr Wakeling: Well, there is too much of course.

  Mr Darcey: Seven matches.

  Mr Wakeling: Yes, seven matches and then you spread it across. I need to come back after the weekend and I will provide you with match averages, I will give you match peaks, I will give you total reach over the three days because we are live on Friday night, Saturday afternoon, one teatime game on Saturday and I think there are two or three games on Sunday. I think this is one of our busiest weekends and I can provide that information for you next week when we have all of those figures.

  Lord Maxton: That would be extremely helpful, thank you.

  Q1049  Lord Holme of Cheltenham: I am curious about one point which is: do you make any distinction between A list and B list? Even in the construct you have got of preparing an open, competitive basis for everyone, would you recognise that those great national occasions, which the A list is supposed to represent, where the maximum number of people would want to experience it live as an act of, I do not know, national solidarity where we are all interested, would you make a distinction between the A list and the B list in your wish to open up the market, and in your terms, not Lord Peston's terms? Would you make a distinction?

  Mr Darcey: I am not entirely sure what the question is. I think we understand the idea that there are certain sports events that are deemed to have a very broad national interest and that is why they are on the list. I think we understand why that concept has been extended to include a B list as well where things which are regarded as perhaps not quite of the standing as would get them on to the A list, nonetheless, some secondary coverage would be desirable. I think we understand that, yes.

  Q1050  Baroness Bonham-Carter of Yarnbury: I want to ask about the Ashes of last summer. The whole event became so popular that screens were set up in public parks and people were able to watch it there who were not able to get tickets for the event. Would that happen now that Sky has the rights to cricket coverage?

  Mr Wakeling: Sorry, would it happen that big screens would be set up?

  Q1051  Baroness Bonham-Carter of Yarnbury: Yes.

  Mr Wakeling: I do not see why not if the success of the Ashes was repeated. In four years' time Australia may be back here. Let us hope that we are still competitive. We have not done too well in the past couple of weeks in Pakistan. What happened there was quite unique in British sport. If you look at Channel 4's experiences over the six years that they have been covering Test cricket, for example, in the summer of 2004 when Sri Lanka and West Indies were here, the average audience for Test matches was 1.13 million on Channel 4 and for the Ashes the average was 2.16 million. We have all heard of the 7.7 million peak on the fifth day of a Test match after tea as everyone is getting in. I think we have committed to working with the ECB again to reach young people and to work with young people. We are looking at various ways we can invest beyond that money that has been paid for the rights to encourage young people to play. I think that cricket has done a marvellous job before the Ashes. If you look at the success of the Twenty20 competition which, bar one game on Channel 4, has been shown for the past two years only on Sky—and I am talking about people paying to watch, not sitting at home watching it, young families going along to watch it and the same with the national Cricket league as well, with floodlit cricket and the One Day Internationals—I think that the ECB has done a marvellous job of encouraging more young people to go and watch the game. Mind you, I do no know how they get from being Twenty20 fans to watching Test matches. I think you are only going to get a small percentage going up. Test matches are popular in this country but not so popular elsewhere in the world. The answer to your question is that we would love to do that sort of thing.

  Q1052  Chairman: I know this issue does not keep you awake at night because you have said so. The logic of having the Wimbledon tennis finals in Group A and cricket Test matches in Group B does, on face of it, seem pretty difficult to argue I would have thought.

  Mr Wakeling: That was the recommendation of Lord Gordon's Committee in 1997/98 and I think it was the result of a plea from the ECB who were stuck at the time with only one terrestrial broadcaster interested in the rights. I think it is on the record that they did not think they were getting a fair deal. They had nowhere else to go. I appeared in front of that committee and at the time I said we were quite happy with what we had got, but beyond the next negotiation which was coming up I could not say that we would not bid for all Test matches at some stage in the future, which is what we did in November last year. The BBC was certainly surprised when Channel 4 came in and took the rights away from them and I suppose I was surprised this time round that the BBC did not bid for anything with English cricket, anything live, any highlights, any part of it, whether it be Test matches, Twenty20, One Day Internationals, nothing whatsoever. Why was it relegated to the B list? Again it was Lord Gordon's committee recommendation. I appeared there and I suppose I said that I understood the ECB position, they had nowhere else to go, they needed money for investment and the same thing has happened this time round and that was the recommendation. We appeared, we gave evidence, but it was not our decision.

  Chairman: Let us move on then to the questions concerning the European Commission and the issues there.

  Q1053  Lord Maxton: The Premier League has been the star of your programming. How do you respond to this European dimension? Are you responding? Do you welcome it? Do you think it is a bad thing?

  Mr Wakeling: I rather think that at the moment you know as much about it as we do. We were not party to any negotiations between the Premier League and the Commission at all. We have seen the statements that have been made and we have read the speculation. At some stage in 2006 I assume that the Premier League will issue a tender document. I am assuming the six packages of 23 games, which is what has been reported, is correct.

  Q1054  Lord Maxton: Of which you could buy five.

  Mr Wakeling: Of which one broadcaster can buy five. Again I assume what has been published is correct.

  Mr Darcey: I think the press release only says six packages.

  Q1055  Lord Maxton: But no one can buy all six.

  Mr Darcey: That was in the press release, yes.

  Mr Wakeling: How do we react to it? When we see the ITT—because all of you know as much as we do about what is going to happen with this next time round—then we will probably have a view on how it will work. If you look at the present packages of four games, there is a lot of detail in there on maximums. We cannot just do Manchester United, Chelsea and Arsenal every week, we have got to cover each club a certain number of times. There is a maximum in each of the four packages at the moment. The 138 games that are shown now has got nothing to do with Sky. I do not think the Premier League in the last round of negotiations with the Commission was very keen on that. Perhaps there is too much disruption to the traditional three o'clock Saturday kick-off. That was agreed with Brussels. The time slots of Saturday lunchtime and Saturday teatime, which we take a lot of criticism for in terms of disruption, have nothing to do with us, that is in the tender document and that is the way it is. In terms of the rights fee that we would pay, if we could have enjoyed the degree of exclusivity we have enjoyed so far we would probably pay the same amount of money for fewer matches, but it is now going to change and we will respond when we see the ITT.

  Q1056  Lord Maxton: There was a threat yesterday of another major player coming into the field, which is NTL in combination with Virgin. Do you see that as a genuine threat?

  Mr Wakeling: I think there have always been other bidders. ITV was the big bidder in 1992.

  Mr Darcey: In 2000 NTL initially bid four in one for what was at the time described as the pay-per-view package of 40 matches. They then failed to agree a long form agreement with the Premier League and they ended up handing it back and the Premier League subsequently went out and sold the rights to those matches on a platform by platform basis. So Sky bought the rights to show those matches on satellite, NTL bought the rights to show them on the NTL platform, Telewest for their platform and on digital at the time for their platform. NTL has been a broadcaster of the Premier League, although that seems to have been written out of history in some of the press articles.

  Q1057  Lord Maxton: The one thing that did not appear in almost anything you said there was the BBC. Are you telling us that the BBC has really not been competing at all?

  Mr Darcey: No. You were asking about a new competitor. I think we are saying they will be there and they have always been there.

  Q1058  Chairman: You say that the negotiations were between the Premier League and the Commission and you had no part in it whatsoever. Could you not have a view at all? What did you think of it? What did you think of the idea of packaging up?

  Mr Darcey: We have a view, many people have a view, but fundamentally the nature of the conversation was between the Premier League and the European Commission and the reason is that the Premier League is an organisation that sells its rights collectively. That is an arrangement for which they need clearance from the European Commission. The European Commission expressed some concerns about whether that was or was not legal and effectively said to the Premier League, "We think it could be legal subject to us getting comfortable with the way in which the rights that flow from this collective sale will in fact be sold", so it was a discussion between those two parties as to what was necessary to get clearance.

  Q1059  Chairman: At no stage did you in any way seek to influence those discussions, did you?

  Mr Darcey: Several years ago the Commission issued a statement of objections against the Premier League and we were a party to that and I think the BBC probably was as well at the time, and we were invited to make a submission in response to that statement of objections and it was a fairly thorough submission at the time.

  Mr Wakeling: We were not invited this time round to make any submissions at all.


 
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