Select Committee on BBC Charter Review Minutes of Evidence


Examination of Witnesses (Questions 1840 - 1859)

TUESDAY 17 JANUARY 2006

Mr Brian Barwick and Mr Simon Johnson

  Q1840  Baroness Gibson of Market Rasen: How many games are there in the FA Cup on average?

  Mr Barwick: On any FA Cup weekend from the third round to the sixth round there are four matches, three on the BBC and one on Sky, and then in the replays they have one each.

  Q1841  Lord Holme of Cheltenham: Could you help me understand the sponsorship aspect of your income? Out of the £206 million, you have already said that the largest proportion is from television rights. Roughly, what is the figure for sponsorship income?

  Mr Johnson: Again, I do not think that is public either. We have tended to just report it grouped together. To explain how that comes about, we currently have five partners, five sponsors, of the Football Association, each with the right to have branding representation around the FA Cup and the England team, and then we have specific responsibly for particular areas of the game. For example, Nationwide have an involvement with England teams right the way through the levels; Carlsberg have a role with our other trophies, such as the FA Trophy and the FA Vase. So we have had what we call in our building a pillar arrangement where each sponsor is able to take a part and associate themselves with a part of our activities. That obviously knits quite neatly together with the television exposure. Quite clearly, sponsors will want to know what sort of exposure on television they are going to get before they enter into a negotiation with us. The two are tied together.

  Q1842  Lord Holme of Cheltenham: Would those pillars or packages that you sell to a sponsor for the whole season cross over both BBC and Sky television exposure or would they all be BBC or all Sky?

  Mr Johnson: We do not sell the broadcast sponsorship element of it. The BBC, of course, cannot have sponsorship. The ability to have Sky, or if it were ITV, and to have a little commercial going into the break is not something that we can sell.

  Q1843  Lord Holme of Cheltenham: I am not talking about commercials and breaks but the visibility on screen of "Carlsberg" or whatever it is.

  Mr Barwick: Visibility on screens comes in several ways. For example, in the interviews after the games you will often see a backdrop which is commercially driven.

  Q1844  Chairman: The point is this. The company takes that ability into account, that it is going to be shown on the BBC, just as it is going to be shown on ITV and Sky?

  Mr Johnson: Yes.

  Q1845  Lord Holme of Cheltenham: To pursue the point, although of course the BBC is not selling sponsorship, you are selling sponsorship?

  Mr Johnson: I think we are selling exposure. You can then have a perimeter board around the game.

  Q1846  Lord Holme of Cheltenham: You are selling exposure and Carlsberg or the insurance company or the bank, whoever it is, has the comfort of knowing that for that money they will be seen not just by the fans at the ground but by people sitting at home watching it on television?

  Mr Johnson: That is correct.

  Q1847  Lord Holme of Cheltenham: If I could come back to the question which is preoccupying me, it is this. We have already identified that there is perhaps a proportion of 5:1 of viewers at home watching BBC as opposed to Sky, and, even with the qualification Mr Barwick made, it might be 3:1. There are a lot more BBC viewers and therefore, from the sponsor's point of view, that is more attractive because their brand name will have greater exposure if it is a larger audience for the BBC. What I am trying to work out is this. In designing these pillars or packages, do you deliberately—there is nothing wrong with this but I want to understand it—put together a mixture of the less widespread exposure of Sky with the greater exposure of the BBC?

  Mr Johnson: It is possibly not as stark as that. What I explained to you about the pillars is what we have had for the last few years. What we have announced going forward is to have a particular partner who will be able directly to associate themselves with the FA Cup, and a particular partner that will be able to associate themselves with the England Senior Men's Team, as well as other involvement with other parts of our products. When we are out in the market talking to potential sponsors, we are explaining to them what they will get at the ground, what they will get around the events, and what they can expect to get in terms of exposure. There is not a direct correlation between the price that we get and where we are a broadcast.

  Mr Barwick: I can add that there are other ways of commercial people exploiting their association with us. It can be a photograph of the player on a pack of biscuits or whatever, on any commercial goods, or indeed the use of players at events that commercial companies wish to use. There is a number of ways that a commercial company can have an association with us. One of the ways, obviously, is by exposure through our television rights.

  Q1848  Lord Holme of Cheltenham: It would be fair to say that that is the primary thing because the primary thing is: how many people at home am I going to get for this sponsorship?

  Mr Barwick: Historically, it has been.

  Q1849  Lord Holme of Cheltenham: Although there are refinements to that, that is the primary thing?

  Mr Barwick: Yes.

  Q1850  Lord Holme of Cheltenham: I am still puzzled. It means, therefore, that any pound paid by the BBC is geared up, from your point of view, in sponsorship income because by definition the BBC audience is bigger? At the top line, when you look at your income for the exploitation of broadcast rights, you may well be getting, as it were, a premium from Sky, but, when it comes to the sponsorship component of your income, if I am right, it is highly related to the audience delivered, which must automatically make to a potential sponsor the BBC more attractive and therefore your sponsorship income, whatever your broadcast income, must be weighted towards the BBC audiences, which are larger. Is that right or not?

  Mr Barwick: It would be easier to say "free to air. It happens to be the BBC at the moment; it is free to air. The rest of what you surmise is pretty correct.

  Q1851  Lord Maxton: You do not have total control of sponsorship. Each individual club presumably has its own jerseys, for instance?

  Mr Barwick: Exactly, and we have just our piece of the action.

  Q1852  Lord Peston: We have talked a bit about competition already, so we do not need to go over that ground again. You mentioned, I think, Mr Johnson, the European Commission. Presumably you have seen the evidence they gave. They have invented this peculiar thing of the six packages, as I understand it, and you cannot buy more than five. One immediate question is: do you see that as somehow at least an improvement of some sort? Let us start with that?

  Mr Johnson: If I was at ITV, I would have a comment to make on whether it is an improvement from their perspective.

  Q1853  Chairman: What would that be? I get the impression that that would not be an improvement.

  Mr Johnson: On the question of whether that way of packaging the rights is helpful for the sports market—remember we are looking at this as sellers—what we were pleased about with the European Commission was that they supported the principle of collective selling. I think we always felt, and we supported the Premier League very strongly in this, that the European Commission was wrong to argue that the principle of collective selling was a breach of competition. I think we are glad that that is their outcome. The specific outcome they seem to have come up with in relation to the Premier League I think is specific to the Premier League and their circumstances as to how they sell their rights, to whom and how they package it. From our perspective, we are right now evaluating how we might put our rights out on to the market. We do not need to go out to the market for another year or so. Our rights have another two and a bit years still to run and so we are evaluating what we ought to do. Obviously it is of interest to us that that is the way that the Premier League might be selling its rights, but we also take a look at how UEFA are selling their rights to the Champions League and how other sports deal with their own rights. We consider how best we think that we should get value for ourselves, generate competition and help to meet the objectives that I read out a few moments ago. We are interested to see how the Premier League rights might go and whether what we have done has the impact of creating more buyers in the market than might have been the case last time they went out.

  Mr Barwick: The interesting thing from my perspective is that we are selling our rights after the Premier League sold their rights. We will have the benefit of knowing how they spend their money.

  Q1854  Chairman: On this business of having three on BBC and one on Sky, to some extent you have already done what the Premier League are being pressed for?

  Mr Barwick: That happens to be the configuration of the current deal. As a broadcaster, I have worked for the FA Cup on other occasions when the deal has not been struck that way. In fact, I worked at one period of time in ITV where the split was different and what you would call the main glamour game in the FA Cup went to Sky as the first choice. I was working in ITV then, so we used to get the second choice. I always remember when the cup draw was made, a fantastic game would come out of the hat and everyone would think "great", and I would remind them that was on Sky and we had to wait for the next one. There is a reconfiguration in this current deal whereby the BBC has what would be, before a ball is kicked, potentially the best game.

  Q1855  Lord Peston: You are clearly right on collective selling because what is being sold is the competition and, even if you take a great club like Manchester United, if they have not got the competition to play in, gradually no-one would want to watch them. The important point I suppose for us is that you are the governing body of the game. Did the European Commission consult you at all in all of this or, if not, did you tell them?

  Mr Johnson: We have dealt directly with the European Commission in a number of areas. They are doing an investigation on mobile rights and internet rights. We have directly responded to that. I have to say that since I have been at the Football Association, this past calendar year, we did not directly respond to a request from the European Commission. As I said earlier, we did co-operate with the Premier League when we were asked to because the attack was on the basis of collective selling and about the way that rights are sold into the market. Certainly, while I have been at the Football Association, I am not aware that we have been directly asked to contribute to the European Commission.

  Q1856  Lord Peston: This is a hypothetical question, so I will give you a chance not to answer it. If you did feel, in due course, that what was actually happening, because you are the governing body, was not in the interests of the whole game, would you feel able to say in public, "We are not happy with what is going on"?

  Mr Johnson: I am fairly certain, and thank goodness it is a hypothetical question, that if the European Commission had decided that the whole principle of collective selling was anti-competitive and therefore illegal, we would not just have publicly come out and said that but we would have made formal representations to the European Commission about that. I think that was an issue wider than maybe the Premier League.

  Q1857  Chairman: What do you think they may have come out and said?

  Mr Johnson: I think that every time the European Commission has examined the way that rights are sold, whether that is the UEFA Champions League case, the Bundesliga case which they examined, and the Premier League, they have started off by attacking the principle of collective selling. In fact, our competition authorities, if you remember, at the Restrictive Trade Practices Court examined this question at the end of the Nineties. Everybody has examined collective selling from a competition perspective, and no competition authority has concluded that it is anti-competitive. We would endorse that; we always have done.

  Mr Barwick: Returning again to my previous life, I always believed collective selling was the only way you could actually broadcast the right: you need a beginning, a middle and an end of an event.

  Q1858  Chairman: Going back to your previous life, if you were still in charge of BBC sports, would you be bidding for one in six of the Premiership games?

  Mr Barwick: I am not where I used to be and I will watch with interest when the person who currently is does, or does not.

  Chairman: That is a very frank answer.

  Q1859  Baroness Howe of Idlicote: Listening again to the six aims that you have, I wondered whether the BBC does provide a sufficiently high profile for, say, women's and youth football and to support their development, given the real element of public service broadcasting in what they do.

  Mr Barwick: I think I can be positive in the answer to that. Euro 2005, which was the first time the Women's European Championships had been held in this country, was a massively successful event at all levels; firstly, on the level of playing, it was a great event and because it happened outside the regular season, it had a terrific profile. We managed, through really hard work at the FA, to get a lot of people to go and see it. It was great because they were mums and dads and boys and girls. There was a really good feeling at the games. We had an England team that did extremely well because for us it is the fastest growing element of our sport; in fact, women's football is the fastest growing women's sport in the country. The BBC covered every England game live and the final. They did highlights every night during the competition. In fact, on a Saturday evening when England played I think Sweden, there were 3.5 million people watching BBC2 at 8 o'clock in the evening, which is probably close to what the Lottery has on the other side. They worked very hard at supporting the event and we thanked them for that. They also carried the Women's Cup Final. This is moving in the right direction.


 
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