Select Committee on BBC Charter Review Minutes of Evidence


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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