FAPL TV rights: a winter of discontent for regulators, non-UK european viewers and the English pubs

Published 03 September 2012 By: Stephen Hornsby

It will not have passed notice even in this glorious summer of sporting action that there have been some significant developments in the televising of FAPL matches. Only this month, Ofcom suffered what looks to have been a total wipe-out in front of the Competition Appeal Tribunal in its attempt to regulate the wholesale prices that Sky charges to the likes of BT and Virgin. The judgment in Sky's favour has yet to be published as the many parties are arguing about alleged breaches of confidentiality. However, it appears clear enough that Ofcom lost on the facts. This will make it very difficult for the regulator to mount a successful appeal. Sky therefore looks to have seen off this particular threat to its business model. Where that puts Ofcom's five years of effort is another matter altogether.

The other development is the decision of FAPL to implement a radical plan to limit the number of matches shown live by European broadcasters that are played on Saturdays to just one per weekend. This is also very significant. It will be recalled that earlier this year, Karen Murphy appeared to have defeated FAPL's attempt to restrict the sale of decoders which enables reception and broadcast of matches that are played and broadcast in some EU countries outside the UK. There was something of a wrinkle in this defeat for FAPL in that where copyright material was actually used (such as the anthem) pubs such as Karen Murphy's would not be able to broadcast matches to their customers containing such material without permission. Nevertheless the outcome was generally perceived as a potential threat to FAPL's critical UK broadcast revenues from Sky.

However there was always a radical difficulty with this victory for the "little man". The difficulty arises from the fact that the way EU Law operates actually encourages the reduction in sales outside the national territory provided it is the unilateral decision of the seller. This outcome is counter-intuitive; one would suppose that the EU would wish to do anything to encourage sales. Unfortunately, EU law is something of an ass; in fields other than sport and broadcasting this has been fairly well known for a very long time indeed.

To explain the difficulty we have to begin at the beginning. The EU has always taken a hostile view to banning of exports, re-exports, imports or re-imports within the EU. The contractual ban on decoders therefore fell easily within the general prohibition of such bans.

Sellers have tried to have their cake (high "home" country prices) and eat it by penalising foreign distributors who sell outside their territories and undercut high margins in the home country market. Such attempts have been made particularly in the pharmaceutical industry. In a number of cases, the EU has successfully prohibited contractual limitations of sales of pharmaceuticals designed to prevent them being re-exported into higher price countries; but this has been where distribution agreements actually contained export penalties or disincentives as opposed to unilateral limitations of sales. As far as matches outside the UK are concerned, FAPL's plan to reduce broadcasts is clearly a unilateral act; and as such, can't be stopped by law.

The net outcome of this situation is that so long as the FAPL is prepared to accept lesser revenues from its foreign broadcast partners, there is nothing to stop the pub landlady effectively being cut off at the pass and having far fewer programmes to broadcast in the future. This also means that EU law makes foreign consumers worse off because they get fewer matches to watch.

The question arises of whether it would have been better to allow the decoder ban and thus enable consumers outside the UK to have the benefit of more broadcasts and FAPL greater revenues? Or is it better to have the current situation whereby fewer matches are broadcast in a manner which can't be prevented by law? By making the ban on exporting decoders illegal, the ECJ penalised two constituencies for no ultimate gain. The case thus illustrates the fundamental dilemma of free market rules namely that no-one can be forced to sell outside their territory if they do not wish to do so.

For regulators, it is probably back to the drawing board or trying to move on from these costly battles with Pay TV monopolies. For the pub landlady, such as Karen Murphy, there has to be some way of making pubs more attractive. Bringing in the punter to watch the footy on the cheap now no longer looks like a winning strategy. Something will have to be done about alcohol pricing in supermarkets and English pubs' inability to compete. This is the nub of the problem; free trade in decoders to facilitate broadcasting from Greece was never the solution.

Author

Stephen Hornsby

Stephen Hornsby

Stephen is a competition and EU specialist now a partner at Goodman Derrick LLP - first became involved in the application of law to sport when advising Newcastle United on the Bosman case. Since then, he has acted in a number of major regulatory and litigious matters in sports ranging from baseball to rugby union.