Examination of Witnesses (Questions 1320
TUESDAY 13 DECEMBER 2005
Mr Mark McCafferty
Q1320 Lord Holme of Cheltenham:
I would like to ask a question about the BBC's grass-roots activity
but could I just revert to the question Lord Kalms was asking
about bidding. Let us assume in the next round you will be doing
it and that you do market to Channel Four, ITV, BBC and Sky. I
do not want you to betray any commercial confidentiality but do
you do that by a process of on-going bargaining or is it a sealed
bid? How does that work? Are you able to play bidders off against
each other in a commercial way?
Mr McCafferty: It would be a normal bidding
process. We would describe the rights; we would then invite responses
to those rights; it would then be narrowed down to a short list.
There would be a selection committee and then a decision would
be made and in the final throes of that decision there would be
some negotiating going on.
Q1321 Lord Holme of Cheltenham:
Once you got to the shortlist you could say, "A is willing
to pay more than you, you had better up your bid." You could
Mr McCafferty: We would negotiate in the final
Q1322 Lord Holme of Cheltenham:
I just wanted to understand how that worked. My question was about
the BBC. Do you think that the BBC with both its coverage of Rugby
Football Union and some of the big listed events and its general
interest in rugby should be doing more as grass roots promoters
Mr McCafferty: We are always looking for partners
to work with in terms of grass-roots so I would like to see as
many broadcasters or other types of partner involved in that.
Q1323 Lord Holme of Cheltenham:
Are they good partners at the moment in that respect?
Mr McCafferty: They are pretty good. There is
more that we can do but I always anticipate there is more we could
do. I could give you one statistic. In our fans survey that I
referred to earlier on, some 40 per cent of those fans, which
I thought was an extraordinarily high number, will go to the BBC
Sports web site for information. Within that fans survey over
80 per cent of our fans have Internet access and are active users
of the Internet. So I think there are whole areas within emerging
channels of communication and broadcast that somebody like the
BBC is well-placed to work with us to explore not only covering
the professional game but covering work that we do in the community
with local clubs and schools and so forth, as I mentioned earlier.
Q1324 Lord Holme of Cheltenham:
When you say they are pretty good, you feel they could do more,
particularly in respect of the Internet?
Mr McCafferty: I always feel they could do more.
We look for and expect to be challenged ourselves with being creative
because we are competing in a pretty active market-place for sports,
not only in terms of grass-rootschildren's, boys', girls'interest
in the sport but also at the top-end professional area in terms
of sponsorship money, et cetera. I am always looking within the
organisation and the partners that we work with for creativity,
innovation and new channels to market, et cetera. Once you get
bogged down in only looking at one business model of the way in
which a sport is promoted and developed and covered then that
is the day that you start to become complacent and you go backwards.
I personally come from a background in consumer businesses so
I approach it first and foremost as a sport I love, yes, but also
as a consumer business, and how do you speak to an audience and
how do you build a brand over a period of time. I think in some
of those emergent channels for information and coverage, if you
look at what has happened in the film industry where people are
able to make films at a much lower budget off the high-tech equipment,
should we be looking at broadcasting in a more creative way and
doing that type of thing as well.
Chairman: We have got a whole series
of questions and I am just going to come back to you Lord Kalms?
Q1325 Lord Kalms:
Just coming back to a point you made before, our role is to understand
the BBC's commitment to broadcasting sport. You said before that
the BBC was substantially outbid by Sky on the last bidding round.
Firstly, I do not understand how you can be substantially outbid
on the process unless it is an absolutely blind bid and you in
your discussions might have marginally indicated (and I will not
tell you how to negotiate) a little whopper as sometimes happens,
but you said the BBC was "substantially" outbid. Do
you think the BBC really was upset at not getting this? How committed
was the BBC? One of the great dangers we see, and how I come to
this question explores that aspect from our point of view, is
if the BBC can always be number two and still make a respectable
bid but making sure it never wins, but from your point of view,
how was it that they were substantially outbid, and do you think
they were disappointed?
Mr McCafferty: First of all, they bid and won
on the Powergen Cup. I am putting words in the BBC's mouth, I
do not know this for a fact, but looking at the business model
from their perspective they have the coverage of the Six Nations.
As a result of winning the Powergen they now have three games
of ours covered and could do more in the window between the start
of the season in September and Christmas, and they also have coverage
in the semi-final and finals. In terms of the coverage of Rugby
Union as a sport during the season that is quite a neat progression,
as it were, from Powergen coverage, into Six Nations, they can
use the highlights as they want from the autumn internationals
and from our Premiership and then they are into a semi-final of
Powergen and into the final of Powergen, and that would happen
in April. So I imagine that one of the ways in which they look
at it is they have got a whole series of sports to cover, how
much Rugby Union do they want and how does it fit into their scheduling
when they do not have a dedicated sports channel.
Q1326 Lord Kalms:
Why do they bother to bid at all?
Mr McCafferty: That is a question you will have
to ask them to answer.
Q1327 Lord Kalms:
That is a rhetorical question. Nevertheless, if it went right
to the end and at some stage there were the two of them eye-balling
and yet the other side paid substantially more for something for
which they did not get right the information regarding the BBC's
bid, and the BBC still bid despite having this big package. So
I am trying to get the logic of the whole process of bidding.
I do not think you can give me the answers.
Mr McCafferty: On that level of detail I would
need to come back to you because I did not have direct experience
of what they were like in the final stages. I cannot give a qualitative
answer to your question about how they approached that.
Q1328 Lord Kalms:
When you told the BBC they did not get the last bid were there
tears in the eyes of the man who put the tender in?
Mr McCafferty: I do not know.
Q1329 Lord Kalms:
You were not there.
Mr McCafferty: I was not there, I cannot speak
for his emotions.
Just to get it again on the record. I was rather concerned about
Premier League Rugby being written off as a minority interest.
Mr McCafferty: Not so much as I was, Chairman!
But I just wanted to get that figure on the record. It was 1.9
million, shall we say 2 million people looked into the Powergen
final on the BBC free to air. Is that the figure you are giving
Mr McCafferty: The last pool game of the Powergen,
just to divert for a second, the way that competition works is
there are 12 English clubs and four Welsh clubs in groups of four
and then in the case of the game that I am referring to, Leicester
versus Northampton, that was the final game of three rounds in
a pool which would decide whoever won that game is the side that
would progress from that group with three other group winners
into the semi-final stage. That is BBC free to air and it was
a 1.9 million audience.
Which by any measure is a pretty big audience?
Mr McCafferty: It is and I think it demonstrates
the strength of the club game and it demonstrates what a high
stakes match can generate in terms of interest. I think one would
have to say, as you well know, they are two pretty passionate
Chairman: Lord Maxton?
Q1333 Lord Maxton:
Skill, passion and violence. Can I in a sense come back to the
Internet question. As you quite rightly say, your audience is
likely to be more broadband literate and have computers and use
them. How do you divide out your rights in terms of them? Do you
separate them out or does Sky get all those rights as well, or
do individual clubs get them?
Mr McCafferty: We do seek to separate them and
Sky have a window of elapsed timeI do not know what that
is, it might be 24 hoursand then after that there is a
greater ability to exploit those.
Q1334 Lord Maxton:
But the individual clubs presumably are all contracted to you
for all their broadcasting rights? You have the right to sell
them for them?
Mr McCafferty: Yes.
Q1335 Lord Maxton:
Do they retain any? Could BBC North East do a contract to show
Sale's home games?
Mr McCafferty: No, they are contracting into
the centre in the area of broadcasting. In the area of local advertising
and ground advertising that is not something we do on their behalf.
Q1336 Lord Maxton:
And each individual club, which presumably has its own web site,
can show its own games live on that, or not?
Mr McCafferty: After the delay, it is
part of that contract there is, that is the window.
Q1337 Lord Maxton:
So they cannot show it live?
Mr McCafferty: That is correct.
Q1338 Lord Maxton:
They cannot show it live.
Mr McCafferty: That is correct but they can
on a delayed basis once they are outside the window.
Q1339 Lord Maxton:
Do you have a web site yourself and do you show highlights?
Mr McCafferty: Yes we do and no we do not.