Examination of Witnesses (Questions 1080
- 1099)
TUESDAY 6 DECEMBER 2005
Mr Mike Darcey, Mr Vic Wakeling and Mr Martin Le
Jeune
Q1080 Lord Maxton:
I can see with a World Championship boxing fight which you are
showing live, probably on pay-per-view at three o'clock in the
morning because it is coming from Los Angeles or somewhere in
the middle of the States, you do not want highlights being shown
at eight o'clock in the morning, would I be right, because that
would be the first time most people would see it?
Mr Wakeling: That is a very good example. We
would not want highlights being shown.
Q1081 Lord Maxton:
So you would insist on exclusivity on that, would you?
Mr Wakeling: If it was pay-per-view, certainly.
With pay-per-view boxing from the US we insist on a seven-day
window.
Q1082 Lord Maxton:
So nobody can show that fight on anything at all.
Mr Wakeling: Under the code of agreement on
user access people do tend to show the knockout.
Q1083 Lord Maxton:
This leads me to a question where I think mobile phones is only
one of the new technologies, the other will be streaming down
on broadband the internet services. Where do you stand on that?
It is very difficult to insist on exclusive rights. If someone
is sitting in the audience with a video camera and a mobile phone
and is beaming it straight down onto his computer and then out
to anybody who wants to pick it up, how do you stop that? You
cannot.
Mr Darcey: I do not think there is much we can
do about that.
Q1084 Lord Maxton:
I presume so far it has not happened.
Mr Darcey: It may have happened but it has not
been so prevalent that we have had cause to worry about it a great
deal. On streaming, I think the way the sports rights market is
moving is towards a general understanding that it is not particularly
meaningful to define live rights differentiating by technology.
Q1085 Lord Maxton:
The English Rugby Union witnesses last week were quite clear that
that is what they were doing.
Mr Darcey: I am saying that the general trend
is to think about there being a live right and not to worry so
much about what is the nature of the distribution technology and
the nature of the screen upon which it would be displayed. Very
few people today sell satellite rights distinct from cable rights
distinct from DTT rights.
Q1086 Chairman:
What you are saying is that, if you take football as a simple
example, it is really up to the league or whatever football body
it happens to be whether they sell you exclusive rights or whether
in their judgment they think it is better (for which they would
not get such a high price) for them to sell you live rights and
then the BBC could have Match of the Day in the evening,
are you not?
Mr Darcey: Yes. We do not particularly insist
on anything. Very common would be, as Vic has said, two bids.
If they want to weigh things up then we would say, "This
is the amount we would pay if we had total exclusivity. We understand
you might want to sell some highlights. This is the amount we
would pay for just the live rights," with the highlights
being elsewhere and the decision is left to them.
Mr Wakeling: As far as all football contracts
in this territory are concerned, with the Scottish FA, the English
FA, the Premier League and the football league, they have all
said there will be a highlights window.
Q1087 Chairman:
But that is their decision.
Mr Wakeling: Yes.
Q1088 Baroness Howe of Idlicote:
Mr Wakeling, you gave a slight indication of surprise at something
the BBC had done by way of bidding. Put yourself for a moment
in the BBC's shoes, how would you evaluate your own way of bidding
given that they have certain rights which mean people overwrite
yours?
Mr Wakeling: I think I said the BBC was surprised
when they lost the cricket rights to Channel 4 six years ago.
I think I said I was surprised that they had chosen not to bid
for live matches and highlights this time round. I have been in
business a long time as you can tell, but I am not sure I can
put myself in the BBC's shoes because I do not know how they work.
I have worked before Sky within commercial broadcasting. I do
not know how they put a value on anything. I do know that they
went public in advance of the last round of cricket bidding. Peter
Salmon, who was head of sport at the time, gave an interview to
the Guardian and said that—this was in advance of
the ECB bidding—they envisaged having problems with the
scheduling of cricket, and it is difficult. I make no criticism
of the BBC whatsoever. It is extremely difficult to schedule cricket.
You are never quite sure when it is going to finish or when they
are going to play either. I have a lot of sympathy with them,
but I am not quite sure how they can put a value on the rights.
Mr Darcey: This is a general issue for all of
the commercial broadcasters. We are all reasonably straightforward
in the commercial world in that we are all trying to make a buck
in a sense and we think about the amount we would bid for a set
of rights according to the value we think it can add to the business.
When we think about ITV and what we might have to bid to outbid
them, we are reasonably comfortable that we can analyse their
business, estimate how many viewers they will get, how much they
would sell the advertising for and so on and reach a view, but
when it comes to the BBC all that rather breaks down because they
have quite a very complex set of objectives that they are trying
to meet. We find it much harder to be able to predict what value
they might end up putting on a particular event. I suppose that
must lead to many commercial broadcasters sometimes being surprised
at what they choose to bid, either high or low, but in a sense
we are saying relative to the value a commercial broadcaster would
put on that that is a bit odd, but I do not think it means it
is wrong, it just means that they are applying a very different
thought experiment to the whole equation.
Q1089 Baroness Howe of Idlicote:
Given that they have a duty to provide coverage for the licence
fee payer, I think what one is trying to find out from you is
whether the priority they give to sport is a high as it should
be given that overall duty because there certainly was some criticism
of their rather low bid under those circumstance.
Mr Darcey: I think it is very hard for us to
put ourselves in their shoes. They have a very complex set of
things they are trying to achieve and different objectives. They
have an extra one that we do not ever really have to think about
that much and that is, if they want to assign some money to one
idea, because they have a fixed income they really have to work
out where the money is going to come from, so they have to work
out what is going to lose out or what else they might have done
and they are not going to do, whereas a commercial broadcaster
tends to think of things incrementally. The Charter will set down
what are the objectives that they should pursue and then I tend
to think it is for the management of the BBC to think how they
will allocate their money to deliver those objectives.
Q1090 Baroness Howe of Idlicote:
Let us put it the other way round. Supposing by your standards
they bid ridiculously high with public money, do you think there
ought to be some sort of independent review of how they go about
their bidding processes?
Mr Darcey: No, not particularly.
Q1091 Baroness Howe of Idlicote:
You mean you have never felt cross at the thought that they had
bid far too high?
Mr Wakeling: You might be disappointed to miss
out on something but I do not think that necessarily means you
are asking for an intervention. The Charter is really the period
when people have a debate about what the BBC is for, what it should
do, what are its priorities and then a licence fee settlement
is reached, and they are given a degree of funding and then the
management choose how to allocate that money to meet those objectives
and I guess that is just part of the background of operating in
the UK.
Q1092 Chairman:
You do not want them to put any more priority into sport, do you,
otherwise they are going to end up outbidding you in a number
of areas?
Mr Darcey: Possibly, but that would probably
leave some gaps somewhere else.
Q1093 Baroness Bonham-Carter of Yarnbury:
You talked earlier about ITV developing sports services. What
would your response be to a BBC channel that was dedicated to
sport?
Mr Darcey: I suppose that would probably depend
on what sort of sports channel it was. Are you thinking this is
a channel that is going to a make a £1.2 billion bid for
the Premier League or are you thinking it is going to show regional
volleyball? There is quite a spectrum.
Q1094 Baroness Bonham-Carter of Yarnbury:
I would imagine it would be a channel that would cover the areas
that you cover. What would its likely market impact be?
Mr Darcey: I think we have a channel that covers
the areas we cover; it is called BBC One and BBC Two. I am not
clear how you think this would differ from the sports that they
currently cover.
Q1095 Baroness Bonham-Carter of Yarnbury:
It would only show sport.
Mr Darcey: Are you thinking sport is going to
transfer from BBC One and BBC Two or is it just going to do more?
Q1096 Baroness Bonham-Carter of Yarnbury:
Both, I suspect. We are talking about the future where there is
the opportunity for a BBC digital channel that dedicates the channel
to sport. What is the likely effect that would have on your services?
Mr Darcey: I would go back to my previous answer
and say that we have a Charter that will say what the BBC is for,
what it is trying to achieve, it will have an allocation of money
and it will decide how best to allocate that money to deliver
the objectives. If the management decides that the one thing they
should do is bring forth a new channel then I am sure they will
do that. I suppose all we would really say is, as for other new
services that the BBC might propose, it would go through a market
impact assessment and, as we have said in our earlier evidence,
we would urge that that would be carried out by Ofcom, so there
would be an independent review of the impact on them, but if it
then passed through that and operated according to a tightly defined
licence then that too would become part of the backdrop of operating
in the UK.
Q1097 Baroness Gibson of Market Rasen:
I want to be absolutely sure what you are saying because I am
finding it very, very strange. You are actually saying to us that
it is only at the time when the BBC Charter is under review that
you are thinking about the possibility of the BBC having a dedicated
sports channel, are you? It is not part and parcel of your marketing
of Sky because Sky is associated with sport. You are giving me
the impression that you do not think the BBC would do it but,
in any case, you only think about it at the time the BBC Charter
is being considered.
Mr Darcey: No, I do not think that is quite
what I am saying. I am saying that the main point at which we
have a major debate about what is the general scope of what the
BBC should do is at Charter time and then in the meantime they
tend to discharge that. I tend to think it is for the management
to take a decision day-to-day on how to spend the money and discharge
their obligations and meet their objectives. There are provisions
for what should happen if the BBC want to propose the introduction
of a new service and that would have to have a service licence.
We think it should have a market impact assessment and we think
that should be carried out by Ofcom. It should then have a very
tightly defined service licence and it should stick to that, but
a proposal, whether it be for sport or whatever, passes those
tests so I guess that is part of the framework.
Q1098 Lord Peston:
In the end you provide very good sports channels and certainly
people with my type of income could not remotely call them expensive.
Whether you are talking about Test cricket in the last couple
of weeks and our ludicrous performance or some of the other things,
it did not cost very much for me to suffer! Could you not argue
that it should not be the BBC's highest priority, being a public
service broadcaster by definition, if you are doing a reasonably
good job, to be doing your job? We are not pressing you too strongly.
Although one would like to see more sport on the BBC, no one could
say you are not doing a fair job.
Mr Darcey: In the scenario we are talking about
here that would come in in a market impact assessment and I think
part of that would be what public value would be created by such
a channel given the framework and the background of what other
people are doing and a view would be reached as to that and a
view would then be taken as to the impact on the rest of the market
and whether there were negatives there that might flow from that.
I think we would like it to be Ofcom who would weigh those up
and decide whether that should go ahead. Within that process we
would make our views known and we would make observations about
whether such a service was wanted and whether it would deliver
public value given what was already available and so on. I would
distinguish that from just a decision day-to-day of the BBC as
to what to spend on particular sports rights to put on BBC One.
Q1099 Lord Peston:
I want to take us on to what you call minor sports and we have
called minority sports, which I think is the wrong expression
because I am pretty sure every sport is a minority sport in the
sense that no one has ever had more than half the population to
watch anything. I think your term minor sports and what you include
are right. You say 30 per cent of your coverage is dedicated to
minor sports. I take it that means time rather than audience.
Mr Wakeling: I am never comfortable with minor
or minority because if you are a badminton player it is a very
important sport to you. Badminton is one of those sports that
the BBC walked away from in the All England Championships which
they covered for years and that are now on Sky and we cover it
live wall to wall for three or four days. In our submission we
say it is something like 100 minor sports in the year. A lot of
those we are covering live but others will be in sports magazine
programmes which are scheduled. I think there is some sailing
on tonight and some powerboat racing on tomorrow morning, half-hour
programmes and half-hour signals. You will then get various other
hour programmes, for example Transworld Sport, which is also on
Channel 4, which will have reports of various sports around the
world. You will have features on sportsmen and on taking part
whether it be in BMX or croquet. We actually cover bridge. Last
year we did six one-hour recorded programmes covering a bridge
tournament. I am not quite sure if you can classify bridge a sport.
There are people who are interested in it as a past time and we
thought in the middle of the afternoon or in the morning—because
we repeated it three times in a 24-hour window—there would
be people interested in that. We do try and cover as many sports
as possible because there is huge interest.
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