More than any other source of revenue, TV rights "are what has propelled the Premier League towards its current status as the richest football league in the world," according to Dan Roan of the BBC. It is natural, therefore, that "any perceived threat to this ultra-lucrative status quo might cause shudders in club boardrooms up and down the country, and at the Premier League's Gloucester Place HQ." So how significant "is Virgin Media's request that Ofcom opens a formal investigation into the way the Premier League sells its TV rights, and what will happen next?" First of all, Ofcom "is giving nothing away in terms of whether it is likely to agree to look into the arrangement, and typically takes about eight weeks before deciding on such matters." Virgin Media "is positioning itself as consumer champion," highlighting the fact that U.K. fans pay the highest prices in Europe to watch football on TV, adding that a further 60% rise in the cost of the rights is predicted in the next auction. But as ever in sports business, "there is a lot going on behind the scenes." Virgin Media is unhappy with the amount of money it has to pay Sky and BT to show live football on its cable networks, and it is in its interests "to try to engineer some downward pressure on the cost of these wholesale rights." And "what of the broadcasters?" Have football rights "become too expensive for them?" Hardly. Sky's profits "fell last year" because of the £760M it had to fork out for Premier League rights. But its profits "were still more than half a billion pounds." That "hardly suggests Rupert Murdoch has overpaid." Enders media expert Toby Syfret said, "If nothing else, this is is a timely reminder of the importance of the public, who must ultimately bear the brunt of the escalation in top-league rights, already so much higher in the U.K. than anywhere else in Europe. Assuming Ofcom intervenes, it opens up the prospect that we will not only see much lower inflation of these rights than predicted at the next auction, but maybe also wider choice and lower price per game" (BBC, 9/30).
BLIND AUCTION?: In London, Christopher Williams wrote the Premier League "has not yet issued a tender for the upcoming auction, so the pay-TV operators do not yet know exactly how it will work this time around." However, "the clubs are likely to want something close to what happened last time," given the total bill represented an increase of around 70%. During the auction, which lasts several weeks, "the bidders did not know what the other side had bid." The Premier League runs the process as a blind auction, "whereby bidders must submit a sealed offer for each package without knowing what others have bid or even their identity." If the EPL decides to follow the same process again and assuming Ofcom does not intervene this time, "it is possible more bidders could come to the table to complicate the calculations" for Sky and BT. Discovery, the broadcaster that like Virgin Media is backed by U.S. tycoon John Malone, "is rumoured to be a contender." Virgin Media's other main criticism of the auction "is that all the rights are sold exclusively." No matches are shown live on both BT and Sky, "and none are broadcast by free-to-air channels." Here, it seems likely that "the Premier League be highly resistant to significant change imposed by Ofcom." Sky's dominance of pay-TV "was built with exclusive football rights as its foundation, and BT is relying on the same appeal to shore up its broadband business" (TELEGRAPH, 10/2).
