The EU's Premier League rights ruling explained
The EU's Premier League rights ruling explained | Media | guardian.co.uk
How the verdict will impact on the football fans, BSkyB, film studios and homegrown TV production companies
How did we get here?
Tuesday's judgment marks the latest – and most significant step – in a long-running saga that began when the
Premier League took legal action against a number of pubs that were showing live football on a Saturday afternoon by beaming it in from overseas. One landlady, Karen Murphy from the Red, White and Blue pub in Portsmouth, and two importers of the supposedly illicit decoder cards took their appeal to Europe. Murphy's lawyers argued she was entitled to show the matches because they had paid a subscription to a Greek broadcaster and that to enforce Sky's exclusivity in the UK was against European free trade laws.
What does Tuesday's verdict mean?
Essentially,
that the ECJ largely agreed with Murphy. It ruled that the imposition of national borders to sell rights on a territory-by-territory basis contravened EU laws on free trade. This could potentially have huge implications not only for the Premier League's rights model, which has driven its huge revenue growth over the past 20 years to the point where it now brings in £3.5bn over three years, but also for every other sports body and content producer in Europe. Kudos, the producer of Spooks and Life on Mars, has already warned it could affect investment in British television production if they are unable to sell their shows abroad on a territory-by-territory basis.
What does it mean for the Premier League?
Premier League insiders are convinced that they can mitigate the damage. Even if it ultimately means they have to sell fewer matches on a pan-European basis to more than one broadcaster, they are confident they will be able to largely maintain the value of the rights deals that have underpinned the explosion in players wages over recent years. Only around £350m-£400m of the Premier League's £3.5bn income comes from continental Europe. They are also closely examining the copyright issues raised by the judgment (see below) to work out how they could use them to their advantage.
What does it mean today?
That, for the duration of the existing Premier League contract (which runs until the end of next season), private individuals will be able to purchase set-top boxes and decoder cards that allow them to beam in football from overseas more cheaply. As such, the 3pm blackout that stops domestic broadcasters from showing matches at the traditional time on a Saturday afternoon will become redundant – for the time being at least. There are different copyright issues around showing matches in pubs, but it appears individual consumers will be free to buy in football from overseas using foreign cards and decoders. For the next 18 months, at least, there could be something of a free for all as consumers work out to get their hands on cheaper football – and more of it. Albeit in a different language. However, Premier League insiders believe that the full judgment may call even this interpretation into question.
There are also obvious benefits for ex-pats in that they will be able to take their set-top box and decoder card with them when they travel to a different country and watch their existing package of channels. Yet the landscape could look very different by the time the Premier League goes to market with its next TV deal.
What will it mean in future?
It could result in a pan-European market for rights as sports bodies seek to mitigate the impact of the ruling. That could be more problematic for the likes of Uefa (who rely on extracting maximum value from every local market) than the Premier League (which are keen, above all, to protect their domestic revenue). There are also major issues for everyone from pay-TV giants from
BSkyB to Hollywood film studios and homegrown TV production companies.
Did it all go Murphy's way?
No, far from it. In a potentially significant move the ECJ also ruled that while beaming in the matches themselves from overseas did not breach the Premier League's copyright, broadcasting the Premier League's "anthem" (can anybody hum it?), graphics and build up without its permission did amount to a breach. Those annoying pre-match Premier League and Champions League anthems and rituals that you thought were just designed to build the atmosphere? Turns out they were brand protection tools.
How could rights holders use this to their advantage?
It's early days, but one obvious route for rights holders would be to force their TV partners to include more copyrighted elements throughout the broadcast – playing music when goals are scored, for example, or mandating specific graphics throughout the broadcast. In this way, the Premier League and other rights holders could help protect their business in pubs and clubs.
What about other sports bodies?
The issues for, say, Uefa are more complex – and potentially more damaging – still. It makes its money by extracting the maximum value from each local market for Champions League rights. Therefore it probably wouldn't make economic sense to sell on a pan-European basis. It will have to work out if the potential impact on rights values (caused by consumers potentially buying cheaper from abroad) is greater than the hit they will take if they sell pan-European.
What does it mean for Sky?
Analysts believe the impact on Sky's business is unlikely to be significant. In reality, they believe it is unlikely to be a flood of subscribers cancelling their contracts in order to swap their Sky box for a Greek one. However, if Sky was forced to go down the route of buying the rights on a pan-European basis and potentially sub-licensing some of them in certain territories – while also ensuring that none of those licensees could undercut it – it would make its business model significantly more complicated. But it should also be noted that the Premier League and Sky have survived a series of regulatory challenges to their symbiotic relationship over the past two decades and none have dented their mutually dependent growth.
What happens next?
The ECJ judgment is passing back down to the UK high court for interpretation by Lord Kitchen, which could take another four or five months. In the full ruling, there is enough ambiguity to keep the lawyers busy for months to come. Meanwhile, the Premier League has to work out whether to go to market with its next TV rights deal from 2013-14 onwards amid the fog of uncertainty.