Select Committee on BBC Charter Review Minutes of Evidence


Examination of Witnesses (Questions 1346 - 1359)

TUESDAY 13 DECEMBER 2005

Mr Richard Scudamore

  Q1346  Chairman: 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.

  Q1347  Chairman: 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.

  Q1348  Chairman: Is there any reason to believe that you will ever change that policy?

  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.

  Q1349  Chairman: 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 million.

  Q1352  Chairman: 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 into it?

  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 them.

  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?


 
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