Examination of Witnesses (Questions 1060
TUESDAY 6 DECEMBER 2005
Mr Mike Darcey, Mr Vic Wakeling and Mr Martin Le
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.
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.
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
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
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,
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.