Following the recent announcement from Ofcom that it would review the obligations on BSkyB to offer its sports content to other operators, Toms Evens of Ghent University and Petros Iosifidis of City University London argue that to promote competition those obligations should be boosted rather than reduced

Evens, Toms

Iosifidis, Petros

LSE Research Online

6/6/2017 Ofcom’s “Must Offer” Review Should Ensure More Competition in Sports Rights Market | LSE Media Policy Projecthttp://blogs.lse.ac.uk/mediapolicyproject/2014/05/02/ofcoms­must­offer­review­should­ensure­more­competition­in­sports­rights­market/ 1/2Ofcom’s “Must Offer” Review Should Ensure More Competition inSports Rights MarketFollowing  the  recent  announcement  from  Ofcom  that  it  wouldreview the obligations on BSkyB to offer its sports content to otheroperators, Toms Evens of Ghent University and Petros  Iosifidisof City University London argue that to promote competition thoseobligations should be boosted rather than reduced.On  16  April  2014,  Ofcom  announced  to  review  the  ‘wholesalemust­offer obligation’ placed on satellite pay TV operator BSkyB in relation to its Sky Sports 1 and2  channels.  As  part  of  the Pay  TV Review  Statement  of March  2010,  the UK  communicationsregulator had attempted to address BSkyB’s market power in the wholesale sports programmingmarket through the introduction of a wholesale must­offer obligation system and regulated pricing(i.e. at a 23% reduction) so that competing platforms would have access to premium sports rights.This  regulatory  intervention  was  successfully  challenged  by  BSkyB  at  the  UK’s  CompetitionsAppeal Tribunal,  but  the Court  of Appeal  forced  the Tribunal  to  reopen  the case. Following  thisdecision, Ofcom will now undertake a review of the obligation. Based on our research into sportsrights we urge Ofcom to maintain, if not strengthen, BSkyB’s wholesale must­offer in order to keepthe UK pay TV market competitive, and create opportunities for new entrants in the market.Changes in the marketIn its statement, the regulator indicates that since imposing the wholesale must­offer on BSkyB, anumber of market developments have taken place that need to be considered as part of such areview.  In  particular,  Ofcom  seems  to  suggest  that  the  pay  TV  market  has  become  morecompetitive as a result of BT Sport’s acquisition of the Champions League TV rights (for a record£897m)  and  Virgin  Media’s  takeover  by  cable  giant  Liberty  Global  (for  £14bn).  Moreover,  thepopularity  of  online  video  services  including  BBC  iPlayer,  YouView,  Netflix  and  LOVEFiLM  isputting pressure on the competitiveness of the pay TV market.The  conclusion  that  consumers  are  relying  more  and  more  on  alternative  platforms  to  watchtelevision does not, however, imply that BSkyB’s dominance over the UK sports rights markets hasbeen reduced to a significant extent.A dual regulatory approach for sportsIn our book The Political Economy of Television Sports Rights we made a strong argument for adual  regulatory  approach  with  regard  to  sports  broadcasting.  Such  an  approach  combines  theapplication  of  competition  law  with  media­specific  regulation,  namely  major  events  legislation.While the latter may be less relevant on this occasion, competition issues are at the heart of thewholesale must­offer.It is our conviction that exclusive licenses create monopolies in the pay TV market, and allow forexcessive mark­up pricing. Sports leagues as well as customers may therefore benefit from sucha non­exclusive approach where live rights are licensed across multiple pay TV platforms.Non­exclusive licensing models not only allow alternative operators to obtain key sports rights theyneed to enter the market, but also provide the option to customers to pick the pay TV operator oftheir choice. They would no longer be forced to choose a particular delivery platform on the basisof the provision of key sports programming. Since all pay TV operators would have equal access6/6/2017 Ofcom’s “Must Offer” Review Should Ensure More Competition in Sports Rights Market | LSE Media Policy Projecthttp://blogs.lse.ac.uk/mediapolicyproject/2014/05/02/ofcoms­must­offer­review­should­ensure­more­competition­in­sports­rights­market/ 2/2May 2nd, 2014 | Guest Blog, Media Plurality and Ownership | 0 Commentsto  sports  programming,  increased  competition  in  the  market  could  result  in  enhanced  pay  TVpenetration as well as reduced subscription fees.Moving to multi­platformIn the US and several European countries, sports leagues are moving to a multi­platform strategy,agreeing  licensing  deals with multiple  pay  TV  operators.  By  imposing wholesale must  offers  todominant pay TV operators, Ofcom can support  a non­exclusive  licensing approach which  is  initself a rather market­driven model.This article gives the views of  the author, and does not represent  the position of  the LSE MediaPolicy Project blog, nor of the London School of Economics.

Ofcom’s “Must Offer” Review Should Ensure More Competition in Sports Rights Market

Evens, Tom

Ghent University Academic Bibliography

         Dit opiniestuk verscheen op 2 mei 2014 op LSE Media Policy Project blog   Online te raadplegen via  http://blogs.lse.ac.uk/mediapolicyproject/2014/05/02/ofcoms-must-offer-review-should-ensure-more-competition-in-sports-rights-market/             blogs.lse.ac.ukhttp://blogs.lse.ac.uk/mediapolicyproject/2014/05/02/ofcoms-must-offer-review-should-ensure-more-competition-in-sports-rights-market/Blog AdministratorOfcom’s “Must Offer” Review Should Ensure More Competitionin Sports Rights MarketFollowing the recent announcement from Ofcom that it would review theobligations on BSkyB to offer its sports content to other operators, TomsEvens of Ghent University and Petros Iosifidis of City University Londonargue that to promote competition those obligations should be boostedrather than reduced.On 16 April 2014, Ofcom announced to review the ‘wholesale must-offerobligation’ placed on satellite pay TV operator BSkyB in relation to its SkySports 1 and 2 channels. As part of the Pay TV Review Statement of March2010, the UK communications regulator had attempted to address BSkyB’s market power in the wholesale sportsprogramming market through the introduction of a wholesale must-offer obligation system and regulated pricing(i.e. at a 23% reduction) so that competing platforms would have access to premium sports rights.This regulatory intervention was successfully challenged by BSkyB at the UK’s Competitions Appeal Tribunal, butthe Court of Appeal forced the Tribunal to reopen the case. Following this decision, Ofcom will now undertake areview of the obligation. Based on our research into sports rights we urge Ofcom to maintain, if not strengthen,BSkyB’s wholesale must-offer in order to keep the UK pay TV market competitive, and create opportunities fornew entrants in the market.Changes in the marketIn its statement, the regulator indicates that since imposing the wholesale must-offer on BSkyB, a number ofmarket developments have taken place that need to be considered as part of such a review. In particular, Ofcomseems to suggest that the pay TV market has become more competitive as a result of BT Sport’s acquisition ofthe Champions League TV rights (for a record £897m) and Virgin Media’s takeover by cable giant Liberty Global(for £14bn). Moreover, the popularity of online video services including BBC iPlayer, YouView, Netflix andLOVEFiLM is putting pressure on the competitiveness of the pay TV market.The conclusion that consumers are relying more and more on alternative platforms to watch television does not,however, imply that BSkyB’s dominance over the UK sports rights markets has been reduced to a significantextent.A dual regulatory approach for sportsIn our book The Political Economy of Television Sports Rights we made a strong argument for a dual regulatoryapproach with regard to sports broadcasting. Such an approach combines the application of competition law withmedia-specific regulation, namely major events legislation. While the latter may be less relevant on this occasion,competition issues are at the heart of the wholesale must-offer.It is our conviction that exclusive licenses create monopolies in the pay TV market, and allow for excessive mark-up pricing. Sports leagues as well as customers may therefore benefit from such a non-exclusive approachwhere live rights are licensed across multiple pay TV platforms.Non-exclusive licensing models not only allow alternative operators to obtain key sports rights they need to enterthe market, but also provide the option to customers to pick the pay TV operator of their choice. They would nolonger be forced to choose a particular delivery platform on the basis of the provision of key sports programming.Since all pay TV operators would have equal access to sports programming, increased competition in the marketcould result in enhanced pay TV penetration as well as reduced subscription fees.Moving to multi-platformIn the US and several European countries, sports leagues are moving to a multi-platform strategy, agreeinglicensing deals with multiple pay TV operators. By imposing wholesale must offers to dominant pay TV operators,Ofcom can support a non-exclusive licensing approach which is in itself a rather market-driven model.This article gives the views of the author, and does not represent the position of the LSE Media PolicyProject blog, nor of the London School of Economics.

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Ofcom’s 'must offer' review should ensure more competition in sports rights market

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Ofcom’s “Must Offer” Review Should Ensure More Competition in Sports Rights Market

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