Sky’s Football rights are coming up.
ITV and NTL have joined up to bid for the next round of Premier League TV rights in an attempt to break BSkyB’s exclusive grip on top-flight football. The country’s largest commercial terrestrial broadcaster and the most powerful cable operator are willing to offer at least £170m a year for half the games made available in the next auction, for the 2007 to 2010 seasons.
The groups outlined their alliance in a letter seen by the Guardian, which was yesterday sent to the chairmen of the league’s 20 constituent clubs. The informal agreement is predicated on the European Commission forcing through its demand – fiercely resisted by the league – that no single broadcaster can win more than 50% of the matches up for auction. The dispute between the EC and the league is at a critical juncture, with both sides due to hold meetings in Brussels next week.
Charles Allen, chief executive of ITV, and his NTL counterpart, Simon Duffy, said in the joint letter that a games quota would not destroy the value of a TV franchise that has poured billions of pounds of BSkyB money into Premiership football. The groups said they would ensure the minimum amount they paid for a 50% share of the games would represent 50% of their current market value, ensuring that a floor is set on the value of the rights. Under those terms, ITV and NTL would pay £170m a year. BSkyB, the current rights owner, pays about £340m a year as part of a £1.024bn three-year exclusive contract to show 138 games a season. “As a means of minimising the risk for the Premier League in changing the auction structure, ITV and NTL would consider offering the FA Premier League an upfront guarantee of at least 50% of the current rights fee in return for 50% of the live matches,” said the chief executives.
It is understood ITV and NTL would show the games on the free-to-air and pay-TV platforms. The majority of games would appear on a new subscription channel run by NTL, with the rest appearing on one of ITV’s four digital channels. NTL announced a $6bn (£3.3bn) takeover of rival Telewest last week in a deal that will create a cable group with 3.3 million pay-TV subscribers against BSkyB’s 7.8 million.
ITV and NTL reiterated their argument that BSkyB does not pay an “exclusivity premium” for the rights, because the majority of its investment is covered by pub and club subscriptions. As a result, more than 5 million Sky Sports subscribers make a disproportionate contribution to BSkyB’s profit margins by paying up to £42.50 a month for access to Premiership matches, the letter added. James Murdoch, chief executive of BSkyB, dismissed the claim last month in a heated public exchange with Mr Allen.
The letter concludes by asking the chairmen to lobby the Premier League to consider the 50% quota more seriously. The league intends to auction the rights for the 2007 to 2010 seasons next spring.
“We think this is a fantastic opportunity for the Premier League and its clubs and we are very keen to engage further with the FA Premier League to take this forward,” said the letter.
BSkyB has won every auction of live Premier League coverage, outbidding rivals in 1992, 1996, 2000 and 2003.
In the 2003 sale, the European commission attempted to ensure that live coverage went to more than one broadcaster by demanding that four packages of rights were sold instead of three. Despite the intervention, BSkyB won all four packages in a £1bn deal.
The commission and the league agreed that the next auction would see the live rights awarded to more than one broadcaster. However, the league is resisting the commission’s new demand that no more than 50% of the matches can be awarded to a single bidder.
Sky COO Richard Freudenstein said,
“[The offer] has hardly had the club chairmen jumping from their seats,” Freudenstein wrote in The Observer on Sunday. “Not surprising, considering they had so recently caused such trouble, with NTL reneging on its £328 million pay-per-view bid with the Premiership in 2000 and, a year later, the fiasco of the £180m ITV Digital default.
“The ITV/NTL stunt was an attempt to influence the European Commission as it considers a case against the Premier League’s collective sale of media rights. The proposal could put at risk the health of football at every level; there is a significant threat that it will lead to consumers suffering and is not supported by anybody with the interests of football at heart.”
Well, in the meeting…sounds like we might lose 20%…
Premier League chief executive Peter Scudamore has said talks with the European Commission over football TV rights have been “fruitful”. The Commission has threatened legal action unless the league changes the way rights are sold for 2007 to 2010. The EU wants to prevent any company winning exclusive rights, such as BSkyB has with the present Premiership deal.
European officials said both sides had agreed that at least two broadcasters had to share rights to live matches. Scudamore had outlined a plan to sell five packages of 28 games each, with no firm allowed more than four packages. EU Competition Commissioner Neelie Kroes, who had threatened to curtail talks if the league did not come up with new concessions, said the discussions produced “constructive proposals” which “move us closer to an amicable result”.
She also promised to give a decision on how the league’s proposals were received by Friday, and whether the threat of legal action has been averted. After Tuesday’s talks her team said in a statement that packages must be sold in a way “that ensures that at least two broadcasters each obtain a viable and meaningful share of the live match broadcast rights”.