Examination of Witnesses (Questions 1346
TUESDAY 13 DECEMBER 2005
Mr Richard Scudamore
Mr Scudamore, welcome and thank you very much for coming. The
Select Committee has produced one report on a range of issues
but we were conscious of the fact that there were other issues
which we had not done total justice to, one of which is broadcasting
of sport, and hence our additional inquiry that we are carrying
out. I wonder if I could ask you then as far as Premier League
Football is concerned could you just outline the history of Premier
League Football on television and your relationship with BSkyB.
Mr Scudamore: In the history of Premier League
Football on television, 1992-93 was the first season of the Premier
League. It is worth just making reference to the six or seven
years before 1992 because it is only 20 years ago this year, 1985,
when football had no television deal at all, so in the year of
Heysel, in the year of the Bradford fire, in the year of Margaret
Thatcher's attempts to introduce membership schemes, somewhat
in relationship to those particular issues, attendances were literally
at an all-time low, so clearly it is not that long ago, in most
of our memories anyway, that football reached its low point, and
it had no television deal at all going into 1985-86. The BBC and
ITV together semi-seriously took some live football out of the
top division of English football, never more than 18 matches a
season, basically because between the two of them they were able
to in some ways exact some form of duopoly in negotiations with
football and also because of the scheduling time and their commitment
to scheduling time. In 1992-93 having had various attempts at
working out how top division football might be broadcast live
on television the top 20 clubs got together and formed the Premier
League not by way of breaking away (although that is what it is
sometimes referred to as) but in fact it was the opposite, it
was a restructuring of English football under the auspices and
the sanction of the Football Association in this country and that
was when it was formed. That took it into a new era in terms of
then there were matches broadcast live on television. Then all
of a sudden it went to 60 matches being broadcast live and then
all of a sudden clearly the income stream increased significantly.
But just as importantly, I have to say, as the move to pay television
for live matches was the continued commitment of the BBC through
the iconic programme that is Match of the Day. That is
as important in terms of the evolution of television and the promotion
of the Premier League at that time because clearly the free-to-air
experience of a lot of people was, by most people's argument,
quite a strong promoter of Sky's pay television service. In other
words, people saw a very nice, attractive highlights programme
and then thought, "I will buy some more of that", and
therefore subscribed to the live offering. I think generally people
were very impressed by the range and depth of commitment to live
broadcasting that Sky brought, not just in terms of live matches
and promotion but everything that went with it. The quality of
the programmes and the production values that they brought to
sport were recognised as being different and recognised as being
an improvement. That situation pretty much existed until the next
major shift in terms of Premier League broadcasting came five
years ago when for the first time we moved up to 66 matches live
and then we moved to 40 games on pay per view so we suddenly moved
to 106 live matches out of the 380 matches that are played. That
was the television deal that ended some 15 months ago. We have
now just finished our first season and are almost halfway through
our second season of the latest television deal which sees 138
matches live on television. Through all that time there has been
a free-to-air highlights package which has been with the BBC for
all but the three-year period 2002-04.
And you sell these packages separately?
Mr Scudamore: Absolutely separately but we have
always subscribed to the principle that there will be a free-to-air
highlights package that is only purchasable by a free-to-air broadcaster.
Is there any reason to believe that you will ever change that
Mr Scudamore: I cannot see there is any reason
at all why we will change that policy. There is something very
significant that we did introduce 18 months ago in response to
the regulatory challenge from Brussels and the European Commission
which was this near live package, which is neither live nor highlights,
it is extended highlights, so now you have a regime where 138
matches are broadcast live, the remaining 242 are available in
long form before midnight on the day the games are played (so
on a Saturday night that will be six or seven matches on the Saturday
night) plus we have got the free-to-air highlights in addition
to that, so I think now there is extensive exposure of all matches.
Remind us how much the rights were sold to BSkyB for in 2004?
Mr Scudamore: In 2004 the live rights were sold
for 1024, which is £1,24,000,000 for the UK only. The near
live rights figure is not in the public domain.
Q1350 Lord Kalms:
That is five years?
Mr Scudamore: Three years, 1024.
Q1351 Lord Kalms:
Over three years?
Mr Scudamore: Yes. But the near live rights
are significantly less valuable than the live rights. The free-to-air
highlights BBC number is in the public domain and that is £105
So the highlights are £105 million. Everyone quotes your
rights generally as being one and a half billion.
Mr Scudamore: Generally they do quote about
that number, you are correct.
Chairman: Okay. Lord Peston?
Q1353 Lord Peston:
I am going to ask you about the European Commission and restrictive
practice. Before that could you clarify one thing that probably
everybody knows but me. When we were talking before about Premier
Rugby they are owned by the 12 premier clubs. Can you tell us
who owns the Premier League?
Mr Scudamore: Yes, it is owned by the 20 shareholder
member clubs, exactly the members.
Q1354 Lord Peston:
That is the bit I did not understand. Is it the original 20 or
do you become a shareholder when you get promoted?
Mr Scudamore: It is very clinical. You become
a shareholder the minute the season ends and the new season starts.
It is usually around the AGM.
Q1355 Lord Peston:
So on midnight the new ones come in and the old ones leave?
Mr Scudamore: On midnight at the AGM we grab
back three shareholders' certificates and we reissue them to the
three promoted clubs.
Q1356 Lord Peston:
That is absolutely fascinating. I take it your main criterion
is to maximise income?
Mr Scudamore: I think it is a little more complicated
than that. There are qualitative criteria, there are exposure
criteria and there are production criteria. We go through a process
of vetting potential owners of our rights in terms of how they
are going to promote them, how they are going to broadcast them,
and clearly there are criteria, but one of the interesting evolutions
of the regulatory interventions is that it is almost reducing
itself to being whoever bids the most has to win them because
they are in the regulatory environment and they are under sealed
bid and open tendering processes and everything else. It is pretty
difficult to attach any other attributes other than value.
Q1357 Lord Peston:
But you would have other criteria in mind? In other words, if
you felt that the top bidder was in some broader sense unsatisfactory,
would you be in a position to say we would rather lose a bit of
money and have someone we felt was the "right sort"?
Mr Scudamore: We have an overriding criteria
which is financial security.
Q1358 Lord Peston:
Is it overriding to the extent that no other criteria ever come
Mr Scudamore: No, there are other criteria.
Clearly if an organisation came along and we did not think it
could produce the matches and more importantly we did not think
it was financially secure and would not be able to make the guaranteed
payments that our contract provides for then we would not contract
Q1359 Lord Peston:
So that is very unlikely, thank you, I did not know that. Turning
to the European Commission, when they were waxing very strongly,
it was all about restrictive practices in the classical sense.
Were you surprised by the outcome when it occurred of this business
of the six packages and the restriction to?
Mr Scudamore: The most recent one?