Examination of Witnesses (Questions 1540
- 1559)
TUESDAY 20 DECEMBER 2005
Mr David Morgan and Mr David Collier
Q1540 Chairman:
For four years of coverage?
Mr Collier: Three years.
Q1541 Chairman:
Three years, thank you. The contract that you have signed with
BSkyB for exclusive live coverage of all domestic and international
cricket is valued at £220 million over the period?
Mr Collier: That is right. That includes Channel
5 which is a small element of that totality of the broadcasting
income. The totality over a four-year period is £220 million
Q1542 Chairman:
So it is obviously vastly important; you view it in that way?
Mr Collier: I think when we look back over the
period since we were delisted, you can see the success of the
England side and you can see the amount that has been invested
in grass-roots cricket. We are very proud of the ECB. At the moment
we invest 18.5 per cent of our total income in grass roots cricket
and that compares with Cricket Australia at eight per cent and
compares with the target we were given by Government of five per
cent. Without that level of income we could not invest in that.
Without the success of the England side I do not think we would
be generating the amount of passion and interest there is in the
game today.
Q1543 Chairman:
You said in your written evidence that broadcasting revenue and
the quality of coverage is extremely important to cricket. We
have just dealt with broadcasting revenue. What do you mean by
"quality of coverage"?
Mr Collier: Broadcasting has progressed very
rapidly over the last seven or eight years. I think Channel Four
and BSkyB have done an outstanding job in helping us educate the
general public, with things like the "Analyst", the
"slow mo" replays and the "Hawk Eye" so people
can see leg-before-wicket decisions. I think it has helped demystify
cricket. I think that has been something that has been particularly
important. I am sure that other broadcasters will catch up with
that in the future. I think it is encouraging that the BBC are
looking at cricket again and certainly in bidding for World Cup
rights in the West Indies that will be a big step forward. We
hope the quality of the coverage will mirror what Channel Four
and BSkyB have managed to achieve over the last three or four
years.
Q1544 Chairman:
It is not just quality, it is also the size of coverage as well.
How does the audience on BSkyB compare with the audience on the
BBC?
Mr Collier: If I may refer, Chairman, to the
DCMS Select Committee which you mentioned earlier. The Managing
Director of Sky said openly in his evidence that he hoped their
audiences would be growing to similar levels to Channel Four,
the average audience being slightly less than two million on Channel
Four, but that did expand at peaks at certain periods of the Ashes
series to some eight million at Old Trafford in the last half
hour of that particular match. It is interesting that that was
a higher peak than we achieved at the Oval later on. What is also
interesting is that almost double the percentage of young people
watched SkyB programmes compared to some of the terrestrial broadcasters.
Q1545 Chairman:
When has your audience—and you have had various broadcasters
doing it—peaked as far as audiences are concerned?
Mr Morgan: The peak was the fifth day at Old
Trafford in Manchester where we had 8.4 million viewers. But as
David Collier suggested, the average Channel Four audience has
been somewhere below two million, and BSkyB are now in seven and
a half million homes in Britain. They have a campaign to encourage
members of cricket clubs to subscribe in the next year and I think
they are confident that they will match the Channel Four average
level. Having said that, I think it will take them a little time
to match the peak level of 8.4 million on that wonderful fifth
day in Manchester.
Q1546 Chairman:
Was there ever a golden day before this when it was on the BBC
and even more people, not the 8.4 million, but more than the two
million people, were watching?
Mr Collier: Certainly 8.4 million is the record
by some considerable distance for cricket as far as we are aware
from when records first started. It was an exceptionally unusual
and exceptionally large audience. We are not aware of a BBC audience
for cricket at either a domestic game or international game in
this country that has reached that level.
Q1547 Lord Maxton:
On these figures I must say I find the promise that BSkyB are
making quite astonishing. First of all, to reach the two million
it means over a quarter of their total subscribers (and not all
of them subscribe to sport remember) are going to watch cricket.
I find that difficult to believe.
Mr Collier: I think if I may that is of their
current base. It is obviously expanding very rapidly. They are
hoping, as David Morgan has just indicated, that their promotion
of cricket will help expand that audience as well. I think during
the period of this agreement from 2006 to 2009 we will see the
satellite television audience grow substantively.
Q1548 Lord Maxton:
If we look at the equivalent in terms of rugby, we had the Rugby
Union here and I think 190,000 was their figure on Sky for the
end of season Premier League championship decider. The Powergen
Cup which is shown on the BBC for a game just at this point of
the season, not the final, but at this point of the season, was
1.9 million. Those are not the sort of figures you are giving
us in terms of cricket.
Mr Collier: Certainly we can rely on the evidence
that Vic Wakeling, the Managing Director of Sky, gave to the DCMS
Select Committee. They are the experts in the field and I think
we would have to defer to them on those predictions they have
made.
Chairman: Anything else on these points?
No? Baroness O'Neill?
Q1549 Baroness O'Neill of Bengarve:
We are all aware that cricket poses particular problems for scheduling
because of the length of matches. Do you think that those problems
might be in part addressed by having a BBC free-to-air sports
channel or do you think there would still be terrible scheduling
problems for cricket?
Mr Morgan: I think certainly a free-to-air dedicated
sports channel would help, but I think we need to remind ourselves
that the BBC did have an excellent track record of covering cricket
from 10.30 in the morning, with rain delays, on one famous occasion
delaying the Nine O'Clock News in high summer. It is difficult
to schedule there is no doubt about that. Channel Four found it
difficult to schedule. They frequently wanted us to guarantee
a particular cut-off time, but we need only look to Australia
where Test cricket is broadcast on free-to-air television quite
successfully.
Q1550 Baroness O'Neill of Bengarve:
So do you support a BBC free-to-air sports channel or do you think
that is really unnecessary and it is a matter of there being a
will and then there is a way with existing channels?
Mr Morgan: I think it would be very handy if
such a channel were available and we would be supportive of it,
but I think we need to simply remind ourselves that in other parts
of the world free-to-air broadcasters do ball-by-ball commentary
on Test match cricket and it used to happen on the BBC in this
country.
Baroness O'Neill of Bengarve: Yes, we
all remember.
Chairman: Lord Peston?
Q1551 Lord Peston:
I at least, and I am not sure about my colleagues, am rather confused
about the bidding process and the switch from terrestrial television.
I think in your written evidence you refer to these 27 different
packages which I knew, I must say, nothing about at all. Then
as far as I can see from what was said at the Commons' Select
Committee, there are remarks like Channel Four would only bid
for a highlights package if there was an element of live coverage
and the BBC said they would not bid because they thought Channel
Four were bidding. The whole thing was extraordinarily confusing
or confused or both. I am wondering whether you could enlighten
us fairly briefly what happened.
Mr Collier: Yes, in the bidding process, the
ITT, there was a lot of discussion and I know in the evidence
the BBC provided to this Committee, they referenced a number of
meetings that we had in preparation for the invitation to tender.
That was done very specifically to try to create the broadest
possible range of packages so that people could bid for all or
part of the Test match series, the one day international series,
domestic cricket, or whatever. Although there were 27 packages,
people were also given the freedom within those 27 packages to
bid for all or part of that package, so if it was a package of
a Test match series people were still free to bid for one Test
match and I think the BBC have stated—back to the scheduling
issue—that the Test matches clashed with three or four major
events, Royal Ascot being one major event it clashed with. Fortunately,
there was no clash with the Open Golf or Wimbledon but they had
got prior commitments on a number of those occasions. I think
it was a matter for each of the broadcasters to then determine
exactly what they wished to bid for. I think they have already
answered to this Committee as to why they did or did not bid for
various packages. Clearly as far as ECB was concerned, what we
wanted to do was to create the most competitive market that we
could, to create the widest range of opportunities for people
to bid that we could, and I think that was very satisfactorily
achieved within that tender process. I do not think anybody could
complain. Nobody has complained that there was not an opportunity
to bid for all or part of either our international series or domestic
series.
Q1552 Lord Peston:
I do not want to prolong this too much, but I understand an auction
where there is a simple product that is being bid for in secret,
but if I am bidding for the lot and you are bidding for the one
day game, how does the seller or auctioneer determine the outcome?
Would they come to you and say, "Would you like to accept
the bid for the one days?" and tell the people who have bid
for the lot, "You now cannot bid for the lot"? How would
it have worked?
Mr Collier: I think the scenario became very
simple because a number of broadcasters determined very early
that they were not bidding for a significant number of those packages.
That obviously simplifies the whole process very quickly. A number
of other broadcasters did bid for either all or part of the packages.
I think in their evidence again BSkyB outlined that that was their
approach to the bidding process. It really became a very simple
process at the end because there were a limited number of bids
for the invitation to tender in each of the package areas.
Q1553 Chairman:
And only one bidder for the whole thing?
Mr Collier: Only one bidder for the whole thing.
There was no bidder, other than BSkyB, for any domestic cricket;
there was no bidder for any one-day international cricket; there
was no bidder for any international Twenty20 cricket or the Twenty20
competition, and there was no bidder for the first Test match
series in the summer other than BSkyB.
Q1554 Lord Maxton:
BSkyB presumably wanted an exclusive package if they could get
it. Did they bid considerably more to get an exclusive package
than they would have done if they had had part of it and others
other parts of it? Would your total income have been less?
Mr Collier: If we had had a mixed bid of a terrestrial
channel for one of the Test series and then a satellite channel,
our income, as we have said in the evidence to DCMS Select Committee,
would have been reduced by £80 million on our current level
of income, so that is a fall of £20 million a year or 40
per cent of our total annual income. That would have been disastrous
for the game of cricket. The Board in our fiduciary duties could
not accept a drop of that sort of magnitude because imagine the
success of the England side and the impact on that and imagine
the impact that it would have had on our investment in grass-roots
cricket. It would have decimated it. I think the Secretary of
State has put it very well that cricket was left behind a hard
rock and had very little option.
Q1555 Baroness O'Neill of Bengarve:
So you are telling us that in this case the absence of effective
competition in the bidding produced a greater sum of money for
the ECB and for the game?
Mr Collier: I would not say there was an absence
of competition. I think that the competition was generated by
having a broad range of packages within the invitation to tender.
The fact is very few people bid for those. The fact that those
tenders were there and open for people to bid actually created
a competitive environment. If there had not been that competitive
environment I am sure the bids would have been much lower.
Q1556 Baroness O'Neill of Bengarve:
I think many of us would think if there are no bids for products
the market is not being organised to the best advantage of the
vendor?
Mr Collier: We cannot answer for broadcasters
who choose not to bid. What we have done is we have tried to work
with those broadcasters. I think we are on record as saying we
have sat down with all the broadcasters and talked through things
like scheduling issues. The scheduling issue is something I hope
will be alleviated in the future. I hope when we come to the next
tender process there will be a very competitive market, I think
the success of the England side that we saw last summer has generated
a lot more interest. We are already seeing that with the BBC bidding
for the highlights of the 2007 World Cup. I think this is tremendously
good news and it just shows that the market is becoming more vibrant
and more competitive.
Q1557 Chairman:
The European Commission when it was looking at Premier League
football has more or less said six packages and no one broadcaster
should have more than five. Would something of that sort be attractive
to you? You have got 27 packages but there is no compulsion in
there, is there?
Mr Collier: There is no compulsion but the packages
are there for people to bid to. So I think that that environment
had been created within the tender process. Obviously as part
of the process with Ofcom and the European Commission all of that
was considered during the whole tender process.
Mr Morgan: The decision, if I may say so, to
provide 27 rather than 17 or seven packages was to encourage competition
and to give broadcasters the opportunity to take advantage of
some cricket, and I suppose one needs to say that it was a surprise
to ECB not that the BBC did not bid (we understood their scheduling
difficulties) but it was quite some surprise they did not bid
for the highlights, which is what I think the gentleman there
was questioning about earlier on.
Q1558 Chairman:
But do you regard cricket as a monopoly product? Trying to get
into the European Union and how they seem to have regarded Premier
League football; would you see cricket in that way as well?
Mr Collier: No I think it has a different audience
to football, certainly that was the advice that we received, that
it was treated very differently.
Lord King of Bridgwater: It certainly
is in Europe.
Q1559 Chairman:
The advice from?
Mr Collier: From the European Commission.
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