Examination of Witnesses (Questions 1380
- 1399)
TUESDAY 13 DECEMBER 2005
Mr Richard Scudamore
Q1380 Lord Maxton:
The other two do it in television, right, on a Sky platform, so
you can get those two channels. How do they operate? Do they not
use live games?
Mr Scudamore: It was remiss of me in giving
an explanation of how we sell our rights at the start not to say
that live is sold collectively, near live is sold collectively
and free to air highlights are sold collectively. That leaves
space on a delayed basis for clubs to have their own rights that
revert after a certain window, so generally midnight the day of
the match the clubs are allowed then to exploit the rights on
their own channels. If you like, it is part of the windowing and
we have had that now for some time.
Q1381 Chairman:
Take that in stages, I am not quite sure I understood that. When
am I as a viewer, if I am looking at the Manchester United Channel,
able to view that?
Mr Scudamore: To be absolutely precise, and
you are testing my memory, for a Saturday match if it is played
on a Saturday, by Sunday midnight you would be able to see that
match on a club channel. If that game was played Sunday, Monday,
Tuesday, Wednesday, Thursday, Friday, you could see it midnight
the day of the match. It is only the Saturday games that have
got midnight the day after and every other day is midnight on
the day. However, in a broadband environment if you are on the
Internet and clubs can prove to us that they can geo-block and
therefore they are only capable of being watched in the UK (and
the technology exists to do that) you can have your own club rights
on a broadband Internet system at midnight on the day of the match
so Saturday night midnight. That is what Arsenal do and Liverpool
do and various others do in a broadband environment.
Q1382 Chairman:
In that situation Manchester pays you nothing; is that right or
not?
Mr Scudamore: They do not pay me anything because
they are their rights and all 20 clubs have those rights and all
20 clubs do have moving image on their web sites.
Q1383 Lord Maxton:
They are all subscriber channels, are they not, you have to pay
to watch the Manchester United Channel?
Mr Scudamore: Some do. That is a subscriber
channel. Other people use their moving image content in a more
promotional environment.
Q1384 Lord Kalms:
When the BBC bids for one of your programmes as a public sector
broadcaster, is it inhibited because of the disciplines of promotions
and advertising, or lack of advertising? Is it a level playing
field for the BBC when it is up against an organisation like Sky?
Mr Scudamore: I can only speak for the Premier
League clearly and it is an entirely level playing field. We would
make that decision pretty much on a value basis only, we would
not go through any permutations as to what the value of exposure
or lack of exposure or lack of commercial imaging or commercial
messaging would make. We would not make any calculation on that
historically. I cannot see that would change either.
Q1385 Lord Kalms:
What is the BBC's view about getting the rights of football broadcasting?
How high a priority has it got? It seems to me they can never
win a big battle. It always has to buy the smaller package, does
it not?
Mr Scudamore: Again it is hard for me to say
what the BBC's strategy is in terms of any content. Clearly the
BBC and ITV to some extent are not the same broadcasters as they
were three years ago, five years ago and seven years ago, and
in a digital environment they clearly are not just single channel
or two channel analogue terrestrial broadcasters. They do have
more content, they have more capacity, they have more channels,
and in a digital environment they have a different way and they
are clearly evolving into being digital content providers just
like many others. I think that they take a very sensible approach
to it. They know what they are good at and they know what they
are supposed to be doing. They have public service obligations
clearly but they also have some iconic programming that competes
very well with Premier League football. Quite frankly, they have
other programming which it does better than Premier League football
whether that be in the live environment or other environments,
so if you have got Eastenders or if you have got Strictly
Come Dancing, we sit here understanding that it would be very
hard for Premier League football to compete and generate those
sorts of audiences at those sorts of times of night, and they
have a scheduling issue and they have to weigh up the value of
our rights versus what they can do with other programming, and
in that sense whilst they are not supposed to be commercial, it
is an entirely business-like approach, it seems to me.
Q1386 Chairman:
Correct me if I am wrong, it is also quite difficult for them
to compete in any event financially because, as you have said
before I think, BSkyB sell on rights to clubs, pubs and people
like that? For your free-to-air broadcaster there is not a great
deal of point in doing that, it is impossible to do that because
they are free to air in any event. If for the sake of argument
BSkyB pay £1 billion and get back three-quarters of a billion
pounds in the rights they sell on, for the sake of argument—
Mr Scudamore:—A compelling one!
Q1387 Chairman:—Then
that is quite a good deal as far as BSkyB are concerned.
Mr Scudamore: Let's go back to whether they
can compete. The reality is that the BBC, particularly with an
income that they know because it is a fixed income by way of the
licence fee, could if they chose to compete purchase Premier League
rights. It is for them and them only and not for me (and maybe
it is for you and your Committee) to have a view as to what proportion
of that licence fee is justifiable to put towards sports rights.
It is not for me to say. It is not true they cannot compete; it
is just a question of how much do they want to compete, because
they certainly have the money.
Q1388 Lord Kalms:
Has the BBC ever expressed to you their mission statement regarding
public sector broadcasting football? Have they expressed to you
what their philosophy is or is it just a tender that goes in at
a certain stage? Do you understand their thinking?
Mr Scudamore: In fairness to the BBC, we understand
their thinking. We look at their annual reports and we look at
their mission statements generally. The Director-General has always
taken a keen interest in sport and also the Heads of Sport at
the BBC meet with us and they take us through their philosophies
and mission statements. We understand where they come from in
terms of sport but we are not, as much as we are very proud of
our competition, so presumptuous as to say everybody should have
a huge interest in buying all of it. Clearly we open up a tender
process. Lots of people come along and talk to us and those that
bid, bid and those that do not, do not and those that win, win;
and that is the way I think it should be.
Q1389 Lord King of Bridgwater:
We have heard lots of comments that the BBC are skilful negotiators
and very imaginative in the way that they might approach this
to try and create different packages on things that maybe you
had not originally suggested. Do you have any comments on that?
Mr Scudamore: No, not really. I think the BBC,
quite rightly, play to their strengths in any negotiation or any
promotion of what they do in terms of the equity that comes with
having your programming broadcast on the BBC. I think it relates
back to the previous question about are they disadvantaged in
terms of not being able to commercialise some of their exposure.
The balance is that in a sense any negativity, and there is not
much of that, which is attached to that is more than made up for
by clearly the very, very credible nature of being on the BBC
platform. No sports rights' owner underestimates how significant
it is to be seen to be on the BBC platform. In a sense they work
very hard at marketing even though you might not necessarily think
of them as a commercial organisation. Clearly if you look at their
promotional work, their promotional trailers, the way they cross-promote,
they clearly have some hugely impressive marketing people who
do a very good job in my view of promoting the BBC offering.
Q1390 Chairman:
We say it is a three-year contract. We talk about a billion pounds,
so do we roughly say that that is just over £300 million
a year?
Mr Scudamore: Yes.
Q1391 Chairman:
Just to go back to the point, it would mean the BBC, to compete
with that, using a very big percentage of their annual income?
Mr Scudamore: But that is for the whole 138
games.
Q1392 Chairman:
I realise that. I am not arguing whether it is up to them or not.
I am just commenting that that is the case.
Mr Scudamore: Yes, it is a true comment, but
if you break it down into its component parts, it is £330
million a year for 138 matches. It is about £2.7 million
a match which, in terms of 90 minutes of compelling, unscripted
drama,—
Q1393 Chairman:
That is looking at it one way, but if you are looking at your
income going down the other way, it amounts to over a tenth of
the income of the BBC spent on Premier League football.
Mr Scudamore: If it were to buy it all.
Q1394 Lord Maxton:
Your clubs, of course, play in other competitions which are shown
on the BBC?
Mr Scudamore: Yes.
Q1395 Lord Maxton:
Have you any idea what the BBC pay, for instance, for the FA Cup,
and also some of the European competitions are shown on the BBC,
are they not?
Mr Scudamore: I do not know because it is a
joint deal between the BBC and BSkyB that shows the FA Cup matches
and I do not know what the split of the money is within that class.
It is not my business. There are some UEFA Cup matches which the
clubs own themselves which sometimes are shown on the BBC but
not too many of those, and the Champions League clearly is currently
on ITV and Sky.
Q1396 Lord Maxton:
The Scottish clubs seem to have a deal whereby they are shown
on BBC.
Mr Scudamore: As I understand it, most of the
Scottish club matches are in a pay-per-view environment with the
Sentanta organisation on the pay platform and there are a handful
of matches that are exposed on a free-to-air basis in Scotland.
Q1397 Baroness Howe of Idlicote:
You have said quite a lot about your view of the expertise and
negotiating skills of the BBC but, looking at it the other way
round, when you are looking at who to choose, as it were, what
sort of financial judgments do you make between the revenue and
the exposure when evaluating a TV rights bid from the BBC? I am
thinking particularly, of course, of the importance of it to your
growth; I know you are very popular, but nevertheless the continued
growth of football grass roots, so exposure versus finance.
Mr Scudamore: We are cognisant of it but I have
to say in all honesty that we do not attach much significance
to it because we are extremely popular anyway and, whereas many
sports would give their right or left arm (if it did not stop
them performing the sport) for free-to-air exposure, we are not
in that position. We do not need that exposure for a number of
reasons. Remember, a lot of our economics are driven by attendance.
If you look at a club's economic basis it is usually about a third,
a third, a third: a third from central television, a third from
match day revenue and a third from other commercialisation such
as sponsorships and other kinds of exploitation. If you go back
to the history of the Premier League, one of the reasons it has
been successful in our view is that the virtuous circle from day
one was large income from a pay television service where the numbers
of viewers were not in the first years huge. Combine that with
free-to-air exposure promotion through Match of the Day
on BBC and it led to this rather virtuous circle where we managed
to keep attendances rising extremely fast. If we had gone on day
one to full free-to-air exposure one wonders whether the attendances
would have suffered, or not risen as highly as they did rise,
because a lot of that money in the early days, as you know, in
the early nineties, was invested in stadia, so improved stadia
with live matches to a relatively small audience when the Sky
platform was in its infancy together with the promotional value
of free-to-air highlights made for quite an interesting virtuous
circle. We recognise the fact that right now the old dynamics
of 138 live matches with the sort of penetration that pay television
has are altering and there is now an effect on attendance when
games are broadcast live, even in a pay TV environment. Certainly
when games are broadcast live in an FA Cup environment or a UEFA
Cup environment on free-to-air television you see a marked impact
on attendance. Therefore, whilst we do not really do a calculation
about media exposure, we do an overall look at the effect of media
exposure vis-a"-vis attendance because we still are, I am
glad to say, first and foremost a competition that is in a spectator
sport and the secondary consideration, although it is a big financial
consideration, is the broadcasting.
Q1398 Lord King of Bridgwater:
When the test match was getting rather exciting football attendances
were seen to slump quite a bit and there was some unfavourable
comparison about unsporting behaviour on the football field as
against a very much more sporting contest on the cricket field
and people were then supposed to be very worried about what was
happening to attendances. Have they now come back? What is the
overall attendance now that you have got pay TV even more pervasive?
What is happening overall to attendances compared to five years
ago?
Mr Scudamore: Attendances are very strong. They
have grown consistently since we started. We have pretty much
reached our plateau level in the last two or three years mainly
because the occupancy rates are over and above 90 per cent, and
now the only alteration you will see in our attendances is according
to which teams are in the league or not. If a big stadia club
comes up or a big stadia club gets relegated, that is the only
effect you will see on our attendances. It is interesting that
we are here today because mathematically, as of tomorrow night
when Everton and Manchester United catch up and play two home
games that were displaced from August, I predict that the league
average by Thursday morning will be back past where it was last
season, and therefore all you have every year is an August effect.
There is an August effect every season where at the start of the
season in the first five weeks the average is less than for the
whole season. Football comes into its own when the clocks get
altered and it becomes dark and grey outside and that is when
attendances peak, round about Boxing Day, or Christmas and New
Year, to be precise, and therefore we are back past last year's
attendances.
Q1399 Baroness Howe of Idlicote:
Funnily enough, I was about to ask that sort of question but,
thinking about whether the BBC was interested, say, on the cricket
side, it clearly at some stage dropped its interest. It did not
think it was getting the same coverage et cetera. Are you saying,
because this is what I have picked up, that if the BBC suddenly
completely lost interest (for whatever reason) in covering any
of your football, it would have no effect at all because you have
got so much Sky and other forms of coverage?
Mr Scudamore: No. I think we have achieved a
very good balance up till now where the cocktail that is live
matches in the pay TV environment and highlights in the free-to-air
environment has actually worked; they have helped each other.
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