Sports bodies slam Ofcom pay TV plans

Wednesday, October 28 2009,

Leading sport bodies in the UK have slammed Ofcom's proposed regulation model for the pay TV market as being "fatally flawed in a number of key areas".

The media watchdog is currently consulting on whether to force Sky to free up wholesale access to its premium sport and movie content for rival operators at cheaper prices.

In response, the FA Premier League said that Ofcom fails to acknowledge the detrimental effect its "fatally flawed" approach would have for consumers when the content rights are inevitably devalued. It also moved to dismiss notions that the current UK sports rights market is in a state of failure.

"Ofcom's competition concerns are flawed and fail to identify a coherent, credible and evidenced theory of harm that identifies how consumers are adversely affected," said the sporting body.

"Ofcom relies on a weak, vague and speculative analysis of alleged unmet demand and makes no actual finding that there are high wholesale or high retail prices or what potential innovation is being stifled/prevented."

According to the FAPL, Ofcom's proposal would remove the incentive for rival broadcasters to compete for Premier League TV rights to the detriment of clubs in the league.

The FAPL further said that Ofcom fails to consider the fact that Sky's competitors have historically "not wanted to secure and exploit live PL rights".

It continued: "It is plain that Ofcom's proposed action is being driven by the views of platform operators/retailers who have, to date, been unwilling to invest in content themselves and who simply want to free ride on the back of investments in content and development/innovation made by Sky.

"Far from improving the situation for consumers, the remedy will in fact be to the detriment of consumers as it will critically reduce the quality of the content (due to reduced value of sports rights) which consumers want to watch (whether on television or at the stadium)."

In a separate submission, the England and Wales Cricket Board (ECB) revealed that it has so far not been engaged at all in the consultation. The ECB, which recently agreed a new £300m deal with Sky for England international rights, said that Ofcom is seeking a remedy which would significantly affect grassroots cricket development in the UK.

"The ECB notes that the initial complaints and evidence put to Ofcom has been made by operators who to date have chosen not seek to invest in content themselves. It is wrong that the views of these operators should hold sway to the detriment of sports rights holders and cricket participants and fans," it said.

"We are extremely concerned that should the remedy Ofcom propose be implemented then there will be less incentive for broadcasters to bid for sports rights, and therefore the value of sports rights will be significantly diminished."

Also criticising the plans, the PGA European Tour (PGAET) warned that Ofcom will significantly alter "the free market dynamics of the TV sports rights market" if its forges ahead with the proposal.

The PGAET further agreed with the FAPL and ECB that the regulator's approach would lessen the incentive for other broadcasters to invest in sports rights as they can freely access the content at cheap prices not set by the commercial market.

"Sky channels are already readily available to consumers via satellite, cable, IPTV, broadband and mobile telephony and additional access via new platforms is simply a matter of time and the alignment of market conditions. In our view, there is no evidence of market failure and therefore no grounds for regulatory intervention," said the PGAET.

"Ofcom has not demonstrated the necessary understanding of how the sports rights market works and its proposed remedies will not only fail to deliver the intended results, but will damage the markets for both consumers and rights holders alike, reducing consumer choice, stifling innovation and significantly reducing the available income streams for the development of professional and amateur sport in the UK."