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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