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EU Court Rules Against Exclusive TV Licensing Deal

Posted by timothy on from the slightly-less-seekable-rent dept.

First time accepted submitter r5r5 writes "In possibly a ground-breaking rule, European Court of Justice ruled against exclusive rights to broadcast sporting events within a single member state. The motivation is that such an agreement would enable each broadcaster to be granted absolute territorial exclusivity in the area covered by its licence and would therefore eliminate all competition between broadcasters in the field of those services and would thus partition the national markets in accordance with national borders. Could this be the beginning of dismounting the legacy system of exclusive distribution rights awarded to one company in one state?"

14 of 115 comments (clear)

  1. Re:Competition? Who'd a thunk. by Zironic · · Score: 2

    Well, I think you'll find that the extreme economic liberals consider exclusive licensing to be 'free market' since the event organiser should have the right to sell the broadcasting rights in whatever way he wishes.

  2. The point of the ruling... by Richard_at_work · · Score: 5, Informative

    Is to support the legal position that a citizen of an EU member state cannot be restricted from purchasing goods or services from any other member state - this is a rule that has been in position for years, and the FA were trying to have it not applied to their TV rights (as they gain billions from UK tv rights to Sky, which are now massively devalued).

    It doesn't affect purchases of goods and services from outside of the EU.

    Apple underwent a similar issue a few years ago over their iTunes store restrictions within the EU.

    1. Re:The point of the ruling... by montyzooooma · · Score: 2

      Is to support the legal position that a citizen of an EU member state cannot be restricted from purchasing goods or services from any other member state - this is a rule that has been in position for years, and the FA were trying to have it not applied to their TV rights (as they gain billions from UK tv rights to Sky, which are now massively devalued).>

      Killing exclusivity would devalue the rights, but you could have effective exclusivity. eg it would not be in the interests of a sporting governing body (or whoever negotiates the TV rights) to sell the same package to two different broadcasters if the income from the two deals was less than the income from a single exclusive partner. So you could negotiate non-exclusive rights with eg a Satellite firm, on the understanding that anybody else that wanted rights would have to buy the same package, effectively pricing the competition out of the picture. It might even INCREASE the value of the rights, though ultimately hitting consumers.

    2. Re:The point of the ruling... by Richard_at_work · · Score: 3, Informative

      The case which this ruling is based on is down to Pub and Bar related viewing subscriptions for Sky, which cost venues significant amounts of money in the Uk. This particular venue bought a Greek satellite package for a fraction of the cost - and with this ruling supporting that ability, it basically means that Sky now has lost a significant portion of it's UK revenue because they can legally go elsewhere for the sae service at a fraction of the cost.

      No juggling of rights packages is going to recover that revenue stream, especially as the rights packages are controlled in part by UK monopolies law.

      Just to note, I fully support the ruling.

    3. Re:The point of the ruling... by jimicus · · Score: 5, Informative

      Just to clarify, the reason why this is so important has little to do with individuals buying the sports channels and everything to do with venues that want to show them.

      The UK only has one satellite broadcaster - Sky - and that satellite broadcaster has an exclusive deal with the Football Association for broadcast of UK football matches. Anyone wanting to watch a UK football match on the TV basically has to watch it on Sky. (Those using cable instead of satellite, the cable company pays Sky and pushes the same channel over the cable).

      A normal Sky subscription comes with a contract that states "You're not allowed to use this for a public showing of an event" - pubs are meant to contact Sky to purchase a special subscription that has no such restriction in the contract. That subscription's something like ten times the price of the one sold to domestic customers - and lots of pubs simply don't have the turnover to buy something for ten times the price.

      So a lot of pubs have either bought a domestic subscription and hoped nobody notices - or a subscription from a satellite broadcaster based in continental Europe (who don't charge absurdly expensive prices). Surprise surprise, Sky went ballistic. They had an exclusive license to be the only broadcaster in the UK which this sort of thing undermines; they've been using every bullying tactic in the book to force pubs to buy the UK commercial subscription and now they can't.

    4. Re:The point of the ruling... by haystor · · Score: 2

      The thing is, the Greeks have purchased broadcast rights separately. They were restricted to broadcasting in Greece only. Now they can broadcast cheaply purchased games in any country in the EU. This will either mean games will become less available in other countries as the big countries don't want to cannibalize their own market, or there will be a massive revenue hit as everyone picks up a satellite to broadcast games from the least expensive country.

      Btw, this is *not* a free market solution because it is the government imposing a restriction on what may be agreed upon between consenting parties.

      --
      t
    5. Re:The point of the ruling... by dkf · · Score: 2

      So a lot of pubs have either bought a domestic subscription and hoped nobody notices - or a subscription from a satellite broadcaster based in continental Europe (who don't charge absurdly expensive prices). Surprise surprise, Sky went ballistic. They had an exclusive license to be the only broadcaster in the UK which this sort of thing undermines; they've been using every bullying tactic in the book to force pubs to buy the UK commercial subscription and now they can't.

      The FA have two basic options at this point: they must either persuade satellite broadcasters outside the UK to not sell to the UK market despite the law permitting them to do so, or not sell to them at all. The second option is most certainly permitted, but will cause quite a hit to their income (as UK Premiership soccer is mysteriously very popular) and the first option is going to be a very difficult set of negotiating as the broadcasters in other states will not be willing to give up the right to cross-sell that they've now got.

      It's all very amusing to me.

      --
      "Little does he know, but there is no 'I' in 'Idiot'!"
    6. Re:The point of the ruling... by Bill_the_Engineer · · Score: 2

      This will either mean games will become less available in other countries as the big countries don't want to cannibalize their own market, or there will be a massive revenue hit as everyone picks up a satellite to broadcast games from the least expensive country.

      More likely that Greece would no longer be able to afford the broadcast rights or at least not be able to get them as cheaply. With the whole EU open to them, the broadcasters will no longer consider Greece's geographical borders and internal TV market as a factor for pricing.

      This ruling will benefit UK subscribers in the short term, but Greece may ultimately suffer from it.

      Btw, this is *not* a free market solution because it is the government imposing a restriction on what may be agreed upon between consenting parties.

      Depends on what you mean by "free market solution". You are absolutely correct about this not being a laissez-faire economy. However, laissez-faire doesn't necessarily equate to free market capitalism. It just moves monopolistic powers from the government to the private entities.

      The EU ruling prevents the private parties from creating monopolies amongst themselves. When most people talk about a "free market solution", they mean a market where open competition exists. The EU ruling reenforces that economy at least in the EU.

      --
      These comments are my own and do not necessarily reflect the views or opinions of my employer or colleagues...
    7. Re:The point of the ruling... by Richard_at_work · · Score: 3, Informative

      That is applied by Sky, not the company that provides the game footage - that is provided unbranded to the rights holders who provide their own commentary, advertising, logos and analysis.

      In this case, the Greek rights holder would not be restricted by Sky at all, because they are not taking their feed.

  3. TV and football... Balance of power by Oswald+McWeany · · Score: 4, Interesting

    A quick note to catch the Americans up on what matters most in the world:

    Pubs in Britain had to pay more to show English games than pubs overseas because Sky (who held the British rights) charged more.

    English football league is the richest in the world (most watched sports league in the world as a result)- in part because the TV money is so much higher there so it gets the best quality players.
    A certain % of Sky's money there goes back to the clubs.

    The English league will now lose some of the monetary advantage it had because Sky will have to compete with cheapo-European networks.

    Recently Liverpool Football Club asked to be able to negotiate their own TV rights outside of the league. Their argument : we're a big club- we have more fans- more people turn on the telly to watch us than some of the smaller clubs- we should get more money than smaller clubs that no-one watches.

    This was quickly shot down by everyone else who said it was a terrible idea. ESPECIALLY from the smaller clubs who would as a result get less money- but even some of the big clubs who would get more money as a result were not in favour.

    This is actually how it works in Spain- where clubs like Real Madrid, and Barcelona have budgets that dwarf anyone else. Real Madrid and Barca are the big teams- they negotiate their own TV deals- and as a result have been (even before now) making more money than even the English teams- despite the Spanish league being poorer (wealthwise) in general.

    Liverpool have a point though- now England is losing their advantage as a league- Real Madrid and Barcelona are going to have way more money than any club in England- because they get to negotiate their own deals. Being in England is no longer an advantage- so the wealth gap to the big Spanish teams will grow.

    The tide of power that had been in England for a number of years is now going to shift back to Spain again because their clubs will have much bigger budgets.

    --
    "That's the way to do it" - Punch
  4. Re:Competition? Who'd a thunk. by cHiphead · · Score: 2

    LOL. Here come the metanationals, you idiot. There will be on licensed group for the entire EU, and the small time broadcasters will have to pay up to this 'middle man' of a sorts for broadcast rights. Prices will be driven up, advertising prices will be driven up, sports attendance prices will be driven up. God bless the free market (even though there is nothing actually free about it).

    --

    This is my sig. There are many like it, but this one is mine.
  5. Treat government-imposed restrictions the same by tepples · · Score: 3, Informative

    Btw, this is *not* a free market solution because it is the government imposing a restriction on what may be agreed upon between consenting parties.

    The whole concept of a ban on unauthorized decryption of satellite transmissions is a government-imposed restriction anyway.

  6. Re:Competition? Who'd a thunk. by MoonBuggy · · Score: 3, Interesting

    It sounds good, but the ruling has loopholes you could drive a bus through. Specifically, while the match itself cannot be subject to exclusivity agreements, any copyrighted material (theme tunes and title sequences before the ad breaks, the little logo in the bottom right of the screen, the commentary, etc.) can still be controlled as the copyright holder wishes.

  7. Re:Football == lame by Oswald+McWeany · · Score: 3, Informative

    It is about football (for now)- but it has much wider implications.

    For other sports, yes, but this has the ability to change how the whole information distribution across Europe changes.

    Now Europe, for TV distribution sake, is one. What shows in Greece can be shown in England- What shows in Germany can be shown in Spain.

    Local broadcasters cannot hold a monopoly on individual countries on anything. This could eventually turn into a big euro-fight of the media distributors and we could see a lot of mergers and aquisitions- and big european-wide media giants emerge.

    --
    "That's the way to do it" - Punch