The evolution of the free-to-air broadcasting battle in Europe

Published 29 January 2013 By: Katrien Lefever, Ben Van Rompuy

The evolution of the free-to-air broadcasting battle in Europe

Under European Union (‘EU’) law (Art. 14 of the Audiovisual Media Services Directive), Member States have the right to designate events said to be of such major importance for society that they must be broadcast on free-to-air television channels reaching a substantial proportion of the public. EU Member States have to notify the European Commission of their list of designated events and the Commission then verifies the compatibility of the Member State’s list with the relevant provisions of EU law.  

The events included in the national lists differ from Member State to Member State depending on national traditions. The Belgian list, for example, contains the World Cyclo-Cross championship; while the Irish list contains a showjumping event as a major event. Both the United Kingdom and Belgium submitted lists including the whole final tournament of the FIFA Football World Cup (i.e. a total of 64 matches) and the UK’s list also included the entire UEFA European Football Championship (i.e. a total of 31 matches). The European Commission verified both lists and decided that they were compatible with EU law. As a result, all the designated matches need to be available on free-to-air television in Belgium and the UK.

 

Rejection of FIFA and UEFA’s grounds of appeal 

FIFA and UEFA sought to challenge the European Commission’s approval of the lists of events before the General Court (the EU’s court of first instance). First, they argued that there were certain procedural irregularities in the manner in which the UK and Belgian authorities composed the lists. Second, and more importantly, they argued that the UK and Belgian lists unfairly and illegitimately go beyond the lists of other EU Member States, which only categorize “prime” matches, i.e. the final, the semi-finals, and matches involving the national team, as events of major importance to society. FIFA and UEFA’s challenges were unsuccessful. In February 2011, the General Court found that the European Commission acted correctly in approving the lists of events of the UK and Belgium.1 FIFA and UEFA subsequently brought an appeal to the EU’s highest court, the Court of Justice, claiming that the General Court incorrectly exercised its power of judicial review. 

In its non-binding opinion of December 12, 2012, Advocate-General Niilo Jääskinen advised the Court of Justice to dismiss UEFA and FIFA’s appeals. The allocation of competence between the European Commission and the EU Member States in the procedure for adopting the national lists of events once again lies at the heart of the proceedings. Both FIFA and UEFA claimed that the General Court erred in law when finding that the Commission duly fulfilled its duty of verification of the UK and Belgian lists. The Advocate-General observed, however, that the EU’s legislature conferred on the Commission only the power to check the Member States’ exercise of their discretion (in establishing national lists) for manifest errors of assessment. More specifically, the Commission is required:

(1) to check the procedure for drawing up national lists in the light of the criteria of transparency and clarity;

(2) to ensure that the national lists do not provide for a greater derogation from the freedom to provide services than that accepted by the EU legislature; and

(3) to check the national lists from the perspective of general principles, such as non-discrimination on grounds of nationality.2

According to the Advocate-General, it follows that the review the General Court has to carry out in respect of the Commission’s assessment must observe the same limit.3 In his opinion, the Advocate-General makes an analogy with the limited scope of control the Commission is entitled to exercise in the field of State Aid and, in particular, as regards services of general economic interest under Article 108 TFEU.4 It must be stressed, however, that there is a difference between theory and practice. For example, when checking public broadcasters’ public service remit, ‘it is not for the Commission to decide whether a programme is to be provided as a service of general economic interest, nor the question or the quality of a certain product’.5 Yet in its State Aid decisional practice, the Commission does intervene in establishing the amount of time public broadcasters can devote to sports. The Commission has regularly held that only a proportion of 10 percent of broadcasting time dedicated to sports can be deemed consistent with the remit of offering a balanced and varied programming mix.6 Similarly, when drawing up the Belgian list of events, it was decided, in close consultation and cooperation with the European Commission, not to include certain sports events (i.e. judo championships and volleyball matches). The Commission had raised doubts about the validation of these events as events of major importance to Belgian society.

Seen in this light, several of the grounds of appeal presented by UEFA and FIFA may rightly question the Commission’s compliance with the rules of procedure and its factual assessment in the cases at hand. Throughout his opinion, however, the Advocate-General constantly emphasized that the grounds of appeal essentially amount to a re-examination of the criticisms raised before the General Court. The Court of Justice has no jurisdiction to verify factual assessments carried out by the General Court (save where it is clear that the factual evidence produced before it was distorted). Its review is limited to questions of law. Subsequently, the Advocate-General concluded that the various grounds of appeal must be rejected as inadmissible.

 

 

The value of “listed” broadcasting rights

In considering what is really at stake, it should be stressed that the contested lists of events do not prohibit UK or Belgian pay-television operators from acquiring the broadcasting rights of the European Football Championship and World Cup. The exclusive broadcasting rights may be attributed to the highest bidder, being a free-to-air television or a pay-television operator. The only requisite is that the broadcasters, not fulfilling the criteria of ‘free-to-air television’ and ‘reaching a substantial proportion of the public’, cannot broadcast those events exclusively and, thus, have to offer or sub-license these rights to free-to-air broadcasters.

The restriction of the pay-television broadcasters’ exclusive rights could indeed reduce their willingness to pay and thus depress the value of these rights. Yet there is no firm evidence that pay-television operators would necessarily pay more to acquire those rights than free-to-air broadcasters. First, whilst the ‘list of major events’ mechanism has been in operation, the value of the broadcasting rights of listed events has increased. For example, since 1988, revenues derived from the sale of the European broadcasting rights for the Olympic Games increased at a rate of 65 percent per summer event and 77 percent per winter event. Secondly, even though exclusive coverage of popular sports events is often regarded as being a prime incentive for people to subscribe to pay-television, it seems questionable that the development of pay-television channels would be hindered by their impossibility to broadcast those listed events exclusively. According to the UK regulator Ofcom, the listed events, due to the infrequency with which they are organized (e.g. the World Cup is organized every four years), are poor substitutes for sports content offered on pay-television services.7 Hence, while irregular organized events are undoubtedly important for the public, they are not available on a regular basis, and therefore unlikely to drive up pay-television subscriptions. Thirdly, depending on the demand level and the price advertisers are willing to pay per viewer, free-to-air coverage of sports events could generate more revenues for sports organisers. Not only are advertisers willing to pay more for advertising sports during the commercial breaks, they are also willing to pay more for shirt and board advertising for example. Formula One, being a sponsor-led sport, is a good example of this theory. Formula One races need to be broadcast on free-to-air television to meet their commercial partner’s objectives. Therefore, for a pay-television broadcaster to win the rights to Formula One, it would need to offer a significantly higher price than a free-to-air channel, in order to make up for any shortfall in sponsorship revenues associated with its smaller audiences.8 

 

Conclusion

Even in the unlikely event that the Court of Justice would overrule the General Courts’ judgment later this year, this would not undermine the list of events mechanism included in the Audiovisual Media Services Directive. At most, it could raise a EU Member State’s burden of proof for determining which events merit maximum exposure on free-to-air television. FIFA and UEFA have not yet lost the last legal battle, but the war is already over.

 


1 General Court (Case T-55/08) UEFA v. Commission (2011) ECRII-271; General Court (Case T-385/07) FIFA v. Commission (2011) ECR II-205; General Court (Case T-68/08) FIFA v. Commission (2011) ECRII-349.

2 Idem, § 21.

3 Idem, § 27.

4 Idem, § 20.

5 European Commission, 'Communication on the application of state aid
rules to public service broadcasting' (2001) OJ C320/5, para 36.

6 For references and discussion, see Karen Donders and Ben Van Rompuy, 'Competition
Law, Sports, and Public Service Broadcasting: The Legal Complexity and Political Sensitivity of Measuring Market Distortion and Public Value' (2012) 4 Journal of Media Law 2, 1-16.

7 Ofcom, Pay TV phase three document (2009); Ofcom, Pay TV market investigation (2007).

8 The decision of Sky Sports and BBC to share Formula One rights between 2012 and
2018 is one of the few examples of Formula One shifting (partly) shifting from
free-to-air television to pay-television.

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Author

Katrien Lefever

Katrien Lefever

Katrien Lefever holds a Phd in law from the KU Leuven, Belgium and now works as a company lawyer at the main commercial Flemish broadcast group VMMa. She is also affiliated researcher at the Interdisciplinary Centre of Law and ICT (iMinds-ICRI) at the KU Leuven. She is the author of New Media and Sport: International Legal Aspects (Springer, 2012), and has published widely on media sports law.

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Ben Van Rompuy

Ben Van Rompuy

Dr. Ben Van Rompuy is a senior researcher and consultant at the T.M.C. Asser Instituut, Asser International Sports Law Center (The Hague) and senior associate researcher at iMinds-SMIT (Studies on Media, Information and Telecommunication), Vrije Universiteit Brussel (Brussels).

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