Mandatory Sharing of Sports Broadcast Signals in India: Part 2 – The implications of the STAR Sports decision

Published 04 August 2016 | Authored by: Roshan Gopalakrishna

Mandatory Sharing of Sports Broadcast Signals in India: Part 2 – The implications of the STAR Sports decision

This two-part article offers insights into the Supreme Court’s recent decision in Star Sports India Private Limited vs. Prasar Bharati and Ors.1 (the “Case”). Part 1, (available here), reviews the judgement and provides background on sports broadcasting laws in India. Part 2, below, analyses the implications of the decision by comparing India’s position to other jurisdictions, before looking at the significance of the mandatory sharing of sports broadcast signals in India in the light of the many legal developments in this emerging area of the law.

 

International Comparison

Regulation of the television broadcast of major events is in practice in many jurisdictions across the world. In the European Union (“EU”) for instance, the Audio-visual Media Services Directive (“AVMSD”) establishes several crucial principles for the media landscape in Europe, for television and other audio-visual media services. Article 14 of the AVMS Directive grants each Member State the power to take measures in accordance with the law of the EU to ensure that broadcasters under its jurisdiction are not allowed exclusive rights to broadcast events which are regarded by that Member State as being of ‘major importance’ for society, in such a way as to deprive a ‘substantial proportion’ of the public in that Member State of the possibility of following such events by live coverage or deferred coverage on free to air television.

The Member State is further permitted to draw up a list of designated events, national or non-national, which it considers to be of major importance for society. Member states are required to notify the European Commission about the restrictions they wish to impose under Article 14, whilst the European Commission is in charge of verifying the compliance of such measures with EU law. In 2011, FIFA2 and UEFA3 failed in their respective legal bids to annul the approving decision of the European Commission which had recognised the FIFA World Cup and the UEFA European Championship, in their entirety, as events of ‘major importance’.

In the UK, the Broadcasting Act 1996 requires the Office of Communications (“Ofcom”), the communications regulator in the UK, to prepare and periodically review the Code on Sports and Other Listed and Designated Events (“Code”). The Code provides guidance on matters relating to the televised broadcasts of sports and other events of national interest that have been listed by the Secretary of State for Culture Media and Sport. The acquisition by pay television providers of exclusive rights to the whole or any part of the live television coverage of listed events and the broadcasting on an exclusive basis of such events without the previous consent of Ofcom is restricted.

The purpose of these arrangements is to ensure that key sporting events are made available to all television viewers in the UK, particularly those who cannot afford the extra cost of subscription television. The rights to broadcast listed events - live rights in the case of Group A events (e.g. Olympics, FIFA World Cup, Wimbledon and European Football Championship) or highlights in the case of Group B events (e.g. Cricket Test Matches, Six Nations Rugby or Commonwealth Games) must be first offered to qualifying broadcasters i.e., those broadcasters whose channels are available without payment to at least 95% of the population in the UK. However, qualifying broadcasters are not obliged to bid for these rights.

In Australia, anti-siphoning laws regulate access to significant sporting events by pay TV operators. The Broadcasting Services Act 1992 in essence grants free-to-air broadcasters a statutory right of first refusal to acquire the broadcasting rights to certain sporting events, the televising of which should be available free to the general public.4 The legislation imposes a licence condition on pay TV providers that prohibits them from acquiring broadcast rights to certain sporting events unless a national broadcaster or a network of commercial television broadcasters have the right to televise the events.5 These events are delisted at least 12 weeks before they start to ensure pay TV broadcasters have reasonable access to listed events, especially if free-to-air broadcasters decide not to purchase the broadcast rights for a particular event. Any rights to listed sporting events that are not acquired by free-to-air broadcasters are available to pay TV.

The point to note however is that unlike in India, most countries protect access to major sports events by either requiring the rights holder to broadcast on a free-to-air channel or by providing the public broadcasters/free-to-air broadcasters an opportunity to acquire the broadcast rights. Once the broadcast rights are acquired by a pay TV operator, it is under no obligation to then share the feed with any free-to-air TV operator.

 

Implications

The Supreme Court’s ruling in the Case changes the landscape with respect to current practice and has legal implications for existing agreements between and among sponsors, broadcasters and event organisers. The Case practically creates an additional obligation on the broadcaster to obtain a ‘cleaner’ feed of the ‘master feed’ to be able to then share this feed with Prasar Bharati for retransmission. Technical issues in obtaining/creating a cleaner feed could also potentially result in delaying the ‘live’ broadcast of events. Further, the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Rules, 2007 (the "Rules") place the primary onus of complying with the requirements under the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007 (“Act”) and the Rules on the broadcaster (if it is not the same entity as the event organiser) by providing that ‘adequate arrangements for compliance’ need to be made by the broadcaster at the time of acquiring the rights, thereby also binding event organisers in effect.6 It is not clear what, if any, sanctions would apply to the content rights owner or holder if it is an entity different from the broadcaster in India and the manner in which they will be enforced.

On the legal side, the Case has the effect of altering the deliverables from the event organiser to the broadcaster. Existing sports broadcast agreements will have to be amended to ensure compliance through provisions which either require the content rights holder or owner to provide a separate clean ad free feed to the Indian broadcaster for onward sharing with Prasar Bharati, or which enable the broadcaster to, on its own, edit the ‘world feed’ to remove or block any commercial insertions made by the content rights owner or holder prior to sharing the feed with Prasar Bharati. Any future sports broadcasting contracts entered into by broadcasters with content rights owners or holders in relation to India will have to be negotiated keeping in mind the requirements and limitations specified in the Act and the Rules, as interpreted in the context of the Case.

Of greater concern to content rights owners would be the impact of the Case on existing sponsorships. The Case in effect dilutes the event organiser’s relationships with its other sponsors and commercial partners who are granted certain entitlements (such as the display of the logo and credits on the global broadcast) to the exclusion of their competitors worldwide. This will therefore necessitate the adjustment of existing broadcasting arrangements and could potentially impact some sponsorship valuations. By way of background, sponsors to major sports events often negotiate a wide variety of avenues for integration. These include an official designation, display of logo and trademarks during broadcast, in-stadia branding, product display, digital broadcast inserts such as advertisements, sponsor logos and credits in the form of sponsored scorecards, logo integration into statistics and analysis, on screen sponsor and product mentions, naming rights to specific incidents and stages of play, the right to create a composite logo featuring the sponsor’s and event organiser’s/event’s logos, and the right of first refusal to secure commercial airtime in the sponsor’s product/service category on the official broadcast.

While Prasar Bharati is required to share advertising revenues with the original broadcaster, its advertising arrangements under the Act and the Rules per se are legally outside the broadcaster’s control, unless the broadcaster secures the marketing rights to the retransmission signal after a bidding process vis-à-vis Prasar Bharati in accordance with the Rules.7 This mechanism does not guarantee that the broadcaster will acquire the rights to market the commercial time available on the feed that is re-transmitted by Prasar Bharati. If the broadcaster acquires the marketing rights to the re-transmitted feed, it will be responsible for procuring advertisers and commercial partners for the re-transmitted feed.8 In such cases, the event organiser and/or rights holder could contractually require the broadcaster to either procure advertisers that do not conflict with official event sponsors or, alternatively, provide official event sponsors with the right of first refusal to purchase the commercial time that is available for sale on the re-transmitted feed.

In the event that Prasar Bharati acquires the marketing rights for the re-transmitted feed, Prasar Bharati is permitted to procure and engage with any advertisers that it may deem fit.9 There is no provision in either the Act or the Rules that provides the broadcaster with an opportunity to control, limit or object to the nature and type of advertisers that Prasar Bharati might engage or partner with for the re-transmission. This raises an immediate red flag as the Case potentially dilutes official sponsor exclusivity not only in ad breaks but also on the master feed itself. Therefore, to illustrate, while Emirates is an ICC global sponsor, Prasar Bharati is not limited from displaying the logo of a competing airline on the re-transmission broadcast of ICC events in India without offering the right of first refusal to Emirates. The best case scenario in such instances would be to prevent the on-air advertisers of the re-transmitted feed from claiming association with the event itself.

The Case, the Act and the Rules do not cover or attempt to regulate on-ground or in-stadia advertising (such as pitch-mats, perimeter boards and in-stadium big screens on the one-hand and logos on team clothing, on the other) appearing in the broadcast feed. That said, in the past, the Ministry of Information & Broadcasting, Government of India (MIB) has come down hard on broadcasters for over-advertising and consequently interfering with the viewing experience of sports programmes by digitally inserting advertising on the field of play during live broadcasts.10 In reality, what might result is a greater emphasis on and valuation for this on-ground inventory, which is now relatively free from regulation and assured of exposure on all iterations of the broadcast.

 

Conclusion

The prohibitive costs of acquiring broadcasting rights, low subscription prices for channels in India, threat of broadcast piracy and under-declaration by cable operators have created great pressure on cricket broadcasters to generate revenue through advertising sales.

In the context of cricket broadcast rights, it is also relevant to mention that the placement of advertising during ODI and Test matches in India is likely to be regulated if the Supreme Court orders the implementation of all of the Justice Lodha Committee recommendations as a whole, two of which relate to the restriction of advertisement breaks during the live broadcast of test matches and ODIs in India to only the drinks break, lunch and tea intervals, as well as dedicating the entire space of the screen to the broadcast of play, save for the display of a small sponsor logo. The Supreme Court has instructed the BCCI to examine these issues un detail and consider the implementation of these specific recommendations. Any implementation of these recommendations on advertising effectively would turn the cricket economy on its head.11

In a highly competitive market premised on fine balances and an increased pressure on broadcasters to cater to the needs of international and vernacular viewers, any development of this nature has the potential to be the straw that finally breaks the camel’s back in a cricket rights market so heavily over-reliant on India, especially given the premium price paid by broadcasters to acquire rights and the ever increasing pressure on recover the investments in an extremely price-sensitive market.

 

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About the Author

Roshan Gopalakrishna

Roshan Gopalakrishna

Roshan is Counsel (Sports & Entertainment) at LawNK, a Bangalore based niche law practice specializing in sports, intellectual property, media and information technology laws. In addition, Roshan is also the Chief Legal Counsel at Copyright Integrity International, a world leader in the protection of digital and broadcast rights. Roshan is a graduate of the National Law School of India University, Bangalore.

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