Select Committee on BBC Charter Review Minutes of Evidence


Examination of Witnesses (Questions 1060 - 1079)

TUESDAY 6 DECEMBER 2005

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

  Q1060  Chairman: I am asking whether you made any kind of approach so that your view was known to the Commission or to the Premier League.

  Mr Darcey: The last extensive dealings we had with the Commission were in respect of our contract for the current deal, the one to one we are in the middle of at the moment. The debate between the Premier League and the Commission at the moment is in respect of the next deal. When we concluded our agreement with the Premier League last time the Commission wanted to have a look at that and there followed about a nine month period in which we had various discussions with the Premier League and I think we discussed most aspects of televised football during that period. That culminated in a set of agreements between us and the Commission in respect of that contract and the way in which we bid and what would happen to the rights.

  Q1061  Chairman: If I was you, given your position, I would be pretty irritated if it was all going to get changed. I certainly would make it my business to make my views known. You seem a bit coy about this.

  Mr Darcey: I think everybody is entirely clear on our views. I am not sure there is much more to say. We have had regulators looking at the nexus between football, Sky and the Premier League and television since around 1996. I think it started in the restrictive trade practices court in the UK. We have had months and months and months of debate with the Premier League. I do not think there is anybody left in the country that is in any doubt of our views that on balance we would like an open market and we would like to be able to bid and that we value exclusivity and that is the nature of the pay broadcaster. I am not sure there is more we can say.

  Q1062  Chairman: There are reports in a number of newspapers that government ministers went in to bat basically on behalf of the kind of lack of restrictions that you would prefer.

  Mr Wakeling: I do not know anything about that.

  Q1063  Lord King of Bridgwater: You are very coy on lots of things. I am not quite sure what you are defending because I think you have a perfectly respectable commercial approach and there is nothing to be ashamed of in that. To what extent is the Premier League a UK market, to what extent is it a European market for you in that way, and do you on-sell to Fox and Star or is that something that is done direct by the Premier League?

  Mr Wakeling: It is done direct by the Premier League. We have no rights whatsoever outside our territory of the UK and the Republic of Ireland. They do their own deals territory by territory worldwide. What we provide is our signal. So our coverage goes to wherever they have sold it, into the US, around Europe, Asia, Australia or wherever. We have nothing to do with the sale of those rights whatsoever, nor do we get any return. They have the right to our signal, to our commentary, et cetera. We simply make that signal available to whoever they tell us to.

  Q1064  Lord King of Bridgwater: Free of charge?

  Mr Wakeling: Yes.

  Q1065  Lord Maxton: And it is included in the original price.

  Mr Wakeling: We have made the bid for the rights, we have committed to cover a certain number of games to certain levels and then, of course, the Premier League sells them.

  Q1066  Lord Peston: I understood the bit that you bid for the Premier League stuff and then that gets included in the package that I buy, for example, which in fact compared with going to a game is still incredibly cheap. Because my son is using my ticket at Highbury tomorrow it costs me £55 to watch the game, which is the same as I pay for the 60 games that I get in the special package. What I am interested in beyond that is who do you negotiate with when you are showing your European games?

  Mr Wakeling: The Champions League games that we are showing tonight and tomorrow we negotiate with an agency called Team Marketing on and they represent the rights for UEFA worldwide and they negotiate territory by territory.

  Q1067  Lord Peston: Do you bid or do you negotiate?

  Mr Wakeling: We bid.

  Q1068  Lord Peston: Do you say to them that you would like to buy it and you are offering this or is it that they say who is offering us the best bid for these games?

  Mr Wakeling: There is a written tender document that comes out with the various packages identified and we put a price against those packages.

  Q1069  Lord Peston: So as a market it is quite complicated because, for example, Chelsea versus Liverpool will be on tonight on ITV. Do they then bid for a game whereas you bid for a whole group of games? This incredibly complicated market has never made any sense to me.

  Mr Wakeling: It has worked quite well, of course.

  Mr Darcey: I think there were 17 packages.

  Mr Wakeling: When you look at the various packages, there is something like first choice Wednesday, second choice Wednesday, first choice Tuesday and so on and they are all itemised. ITV really only want the two games at the moment. I should think they will probably want more next time around as they develop their services. They were quite happy to take first choice Tuesday, second choice Tuesday and we said we will take Wednesday nights and the other games that are being played tonight, ie AC Milan versus whoever, I cannot remember. It does have a limited market because, of course, as you probably know, we show all games on the Red button and there will be eight live games tomorrow night. If you go back to the very first broadcast we did for the Champions League, we had something like Dynamo Kiev versus somebody else on screen eight and 10,000 people watched it. I do not know where they came from. It is about widening the appeal of Sky Sports.

  Q1070  Lord Peston: I understand that because I buy all the packages. You would be amazed at what I watch. In my judgment the best football you show is the Spanish football for quality. Is that a separate deal altogether with La League?

  Mr Wakeling: Yes.

  Q1071  Lord Peston: Is it a bid or a negotiation?

  Mr Wakeling: That one was a negotiation with agents representing the Spanish League. We did not negotiate. They have hired an agency to represent them worldwide. I do not know how they did their domestic deal. I do not know if they did it direct with the broadcaster. They hired an agency to represent their deals worldwide. That agency went to every territory, France, Germany, the UK, etcetera and we negotiated the price.

  Q1072  Lord Peston: So as you understand it the BBC could have made an offer for Spanish football on Sky.

  Mr Wakeling: Yes.

  Q1073  Lord Peston: There was nothing to stop them at all. They simply had to come up with a penny more than you offered, did they not?

  Mr Wakeling: Yes, and the Champions League and the Italian League.

  Q1074  Baroness O'Neill of Bengarve: Do you think there is any case for requiring rights holders to sell on rights to free-to-air broadcasters to show highlights or would that seem to be unreasonable?

  Mr Darcey: I suppose it is on the B list and there is a set of sporting events for which that degree of intervention is deemed warranted.

  Q1075  Baroness O'Neill of Bengarve: And beyond that?

  Mr Darcey: I suppose if it is not on that list then I do not really see why that would be the case. As we were saying earlier, the rights holder has a lot of things that they are trying to balance. They are very keen on wide coverage of their sport, they are normally very keen on participation and all these things and they would all love to be on the BBC, they would all love to be on BBC One, but not everybody can fit on BBC One. They are interested in that but they are interested in a number of other things as well. They are interested in the funding that comes from the television rights and that is another means by which they can try to foster participation in sport and the money might help develop the quality of the national team which itself might help foster participation in sport if the national team is successful. They are trying to balance a series of things. The key issue to understand about a pay television broadcaster, which is fundamentally what we are, is that exclusivity is valuable. We cannot sell people a subscription to something that is otherwise available for free.

  Q1076  Baroness O'Neill of Bengarve: I am talking only about highlights at the moment.

  Mr Darcey: There is a continuum that full exclusively, where no coverage whatsoever is available by any other means, is the most powerful and the more you chip away at that the more value to Sky or any other subscription broadcaster declines. Highlights can in principle chip away at that a great deal if the highlights were very extensive, if they were for all matches, if they were full coverage and if, for example, they started straight after the live match was over. That sort of highlights would undermine the value of the live rights to a pay broadcaster like Sky a great deal. Lesser highlights would have a lesser impact. The rights holder is trying to strike a balance between how much Sky is willing to pay for the exclusivity that it feels it would have, what a free-to-air broadcaster might be willing to pay for the highlights that might be offered to it and the overall money situation they face and the overall degree of exposure they are looking for on television. It is a complex judgment. I think we tend to believe the rights owner who has the best interests of the sport at heart is the right entity to make that judgment in the end.

  Q1077  Baroness O'Neill of Bengarve: Would you consider selling on highlights so that people can watch them on their mobiles?

  Mr Wakeling: There is a hold back on mobile rights at the moment. You can watch, for example, Premiership football goals at half-time and on the final whistle.

  Mr Darcey: That contract this time round was won by a joint bid from Vodafone and 3. We bid for that and we were not successful and 3 and Vodafone have that contract and they show clips.

  Mr Wakeling: I think the same is true going forward with the new ECB Test cricket, that highlights packages are available now. I do not know if they have done a deal with Vodafone since it is them who sponsor the England team. Again you will be able to watch Test match highlights at lunch, tea and close of play.

  Q1078  Baroness O'Neill of Bengarve: Commercially speaking, you would sooner have clear, complete exclusivity than highlights being available by other media or other channels, would you?

  Mr Wakeling: I am not quite sure that I would include mobile rights in that.

  Q1079  Baroness O'Neill of Bengarve: They are different from highlights on free-to-air.

  Mr Wakeling: As Mike has explained, a lot depends on timing, for example, in that the semis and matches involving England are on the B list. We were aware when we did that deal that there was a highlights window there for a terrestrial broadcaster and I believe that was offered around and the BBC is showing highlights, but because it is coming from the West Indies and because of the time difference they are not going to be showing those highlights until ten or eleven o'clock at night. We have shown it live in prime time. There was an allowance in the bid. We made two bids. There was a bid for exclusivity and there was a bid for live and free-to-air highlights and they accepted the second one. It was their choice. We looked at that and made that business judgment.

  Mr Darcey: I would like to go back to the mobile point. On mobile clips and highlights, again in principle it has the effect of chipping away the exclusivity available. At the moment you would probably say that has a lesser effect than if it were on prime time on the BBC because fewer people have a video enabled phone and subscribe to such services, but I think that is going to grow through time and that is part of the consideration, particularly going forward with contracts that are going to last a number of years. We are starting to talk about contracts running to 2010. By that time everybody will have to take a view as to how many people will be watching highlights on a phone and the extent to which that might chip away at the value of exclusivity.


 
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