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Ofcom and sport

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David Bond | 11:09 UK time, Wednesday, 31 March 2010

It's the end of the world as we know it.

No, this is not England manager Fabio Capello's response to pictures of Wayne Rooney limping off with a sprained ankle in Munich, but sports' response to Wednesday morning's ruling by Ofcom.

Hit Sky in the pocket and we will pay, say the sports, adding that there will be catastrophic knock-on effects for community projects and, in the case of rugby union, support for players whose careers have been cut short by injury.

Don't believe me? Well, here's Richard Scudamore, chief executive of the Premier League, the competition with arguably the most to lose from the Ofcom ruling.

"Quite simply we are extremely vexed by the whole proposition. We think its outrageous that there should be an intervention at all... it's a market that doesn't need fixing."

Some media insiders predict Sky will reduce the amount it pays for sports rights by up to a third. Such a reduction would be disastrous for a range of sports which have become far too reliant on Sky - Premier League football, English cricket, rugby union and rugby league.

Man Utd win the Premier LeagueManchester United celebrate winning the first Premier League title

Ofcom's decision is ostensibly good news for armchair fans who should be given the chance to buy Sky Sports content for less - whether through rival broadcasters or from Sky itself who will surely have to lower its prices.

And Ofcom has said it will extend the ruling to any Sky channel if the broadcaster simply responds by moving its best sports content to other channels - namely Sky Sports 3 and 4.

But does it necessarily follow that Ofcom's ruling will lead to the sort of dramatic scenario sports are predicting?

Toby Syfret, a media analyst from Enders, argues that the overall impact on Sky's sports revenues will be marginal.

"Perhaps the smaller bodies would be affected, but you would have thought Sky could easily spread the pain," he says.

"I think they [the sports bodies] have a lot less to fear than they say."

None of the media companies that pursued the three-year case against Sky - Virgin, Top Up TV and BT - have been realistic rivals to Sky for premium sports content at any stage in the last decade.

Setanta - the only broadcaster to seriously challenge Sky's market dominance - collapsed. And while ESPN has the deep pockets required to take Sky on, it does not appear to want to challenge the status quo at this stage.

As for Sky, having initially built success on the back of the Premier League and then expanded into sports such as rugby union and cricket, its business is too closely linked to football, cricket and rugby to simply let them wither on the vine.

You only have to look at what's happened in past rights negotiations where there has been no realistic competitor in the market for the Premier League's live rights. Instead of going down the rights values have kept on rising - from £38.2m a year in 1992 to £438m a year in the latest deal.

In fact, the long-term impact of the Ofcom verdict and the separate review of listed events being carried out by the government may have positive effects on sport.

Both inquiries have exposed how our top sports are too reliant on Sky for their income.

That could lead to them having to come up with new ways to commercialise their rights - such as the development of internet streaming which may mean even more choice for fans.

And it may force sports, football in particular, to finally confront a threat far greater than any media watchdog - namely the exorbitant sums of money paid to players.

Comments

  • Comment number 1.

    Great News !!!! Lets hope it actually happens. I am very happy to pay for premium sports events or the latest movie on a pay to view basis, I resent being blackmailed into paying Sky for events that do not interest me & national sporting events being unavailable.

  • Comment number 2.

    yay 1st comment and great blog

  • Comment number 3.

    Great news for the thousands of armchair supporters who have paid through their noses for sport over the years.

    So the wages paid to top sports starts will have to be reduced, big deal I'm not going to lose any sleep over it if a Premier league footballer can't buy a Ferrari every couple of weeks.

    But of course this will never happen as the fat cats will just rob the grass roots level of the sport to line their bulging pockets.

  • Comment number 4.

    As a shift worker sky is god send because the programes available on"mainstream T.V." ARE RUBBISH. sky has a duty to its customers to fight this case, after all we choose to pay its prices for the good services it provides, why should its compititors get its services at a cheaper price after all sky has invested billions and it just seems that virgin,toptv,and bt just want it on the cheap.

  • Comment number 5.

    Good blog!

    I can see skys point, but anything that brings the prices down just a bit is welcome. They are pricing so many people out of live football whilst allowing becnch warmers at hull and wolves to earn 15k+ a week!

  • Comment number 6.

    Footballers being paid a lot? I know it's an easy bandwagon to jump on but it so damn lazy. If revenue comes down players wages won't. Two reasons. It's a globally competitive market and no one will blink until a lot of clubs start going under. Not just the Premiership but across Europe. This (possible) reduction in money has happened before when ITV couldn't see out their contract. Wages still rose.

    On another note. If your company turns over 100 million a year. Who are are your highest paid members of staff? The people that contribute the most to earn you that money. i.e. The players. If it didn't go in their pocket it would end up in the shareholders/ owners.

  • Comment number 7.

    #2 ha ha not 1st

    I think a cap on subscription prices would be better as all Sky will do is put up their subs price and the consumer will pay

    Why are ofcom intervening when there is no need. shoudl just get the bbc to stump up the readies to win the rights from sky and that would have the effect of making them more available. BT have enough money as well why can't they just bid for the rights and then more people would buy their content

  • Comment number 8.

    That the majority of money from Sky that goes to the Prem goes straight into player's pockets, simply reduce the wages of players and problem solved.

    The bubble will bust at some point, and clubs had better be ready; heaven forbid that the sport would fail to learn from the ITV digital fiasco!

  • Comment number 9.

    I get a little bit fed of outsiders such as Ofcom and previously the EU getting involved in the televising of sport. The EU insisted a few years ago that it was unfair on fans to have only one company monopolising the purchase or premiership football so decided that at least one package had to go to someone else. This resulted in the football fan pay for Sky plus an extra £9+ to ESPN (then Setanta) so see the same football it used to previously. I notice David Bond says the news from Ofcom is good news for football fans. Forgive me if I don't believe him, as this was said by the people at the EU when they broke up the Sky monopoly a few years ago and it didn't turn out that way.

  • Comment number 10.

    its a great move by Ofcom, absolutely brilliant, more fans get to watch premium sports, and the price of which will drop, yes that might mean less money going into the sports, but as you have pointed out, sky relies too much on these sports to simply let them wither, and especially from a football point of view, if there is less money coming from sky then the obscene football wages will be reduced, and thats not just the premierleague either, as La liga (albeit to a far lesser extent) is shown on sky sports aswell and gets money from that.

  • Comment number 11.

    Surely it just means we'll have to pay three or four different providers instead of just Sky?
    That can't be better for the fans can it?
    What's the difference in paying £60 a month to Sky, or £20 to them, £20 to Virgin & £20 to BT or whoever?
    Keep it as it is!

    Sky built a succesful business model and offer what people want, why should they suffer for it? If another company can give me what Sky offer for less, then fair play to them, I'll sign up with them. But at the moment, it's not Sky's fault other providers are incompetent.

    And hopefully Man City won't be affected as our money is independent of TV.

  • Comment number 12.

    About time too, but why is HD not included on the list?
    It seems that as with everything else, the regulators are a few years late with their proposals, sky has been allowed to monopolise the industry without any regulation and we the customers pay through our noses for it.

    It's just a shame that some sports seem to be on skys side here, the greedy **** would rather see the consumers (us) charged exorbitant fees with no choice in the matter, than support the spreading of sports to other suppliers, which will automatically increase the amount of potential customers by millions.

    It's just one more reason to hate Richard Scudamore and the PL, is there anyone left who thinks that they care at all about the fans and not just their own salaries?

  • Comment number 13.

    Interesting topic and all that, and I feel that I have some salient and pertinent points to make.
    BUT.......
    It is 14h41 as I write this.
    The most recent comment shown is from 12h47 [ie 1h54m ago]
    Is there any point in bothering to follow this blog?

  • Comment number 14.

    If this decision results in less money for clubs, perhaps the outcome will be the larger premiership teams deciding to go it alone for television revenue, like Italy and Spain, rather than collectively barganing as the Premier League. This would result in Man Utd, Liverpool, Arsenal and Chelsea etc getting a lot more than Bolton and Wigan etc. surely this wouldn’t be good for football!

  • Comment number 15.

    Excellent news for us unfortunate 2% of the population who can't receive Sky broadcasts due to Line of Sight problems ...
    If BT get those packages I will certainly be signing up for SS1 and SS2 ... bring it on !!!

  • Comment number 16.

    If the majority of TV money goes the the clubs who then pay an out of proportion amount on wages to get on TV, then clubs go broke because of the lack of TV money Is it not time to stop the madness?
    The game will still progress and keep the fans happy, the players will still be paid a lot of cash in comparison to 99% of the fans in the stadium. If the payment for games does down the more fans will watch.
    And more matches will be watched as more subscriptions taken out cheaper.

    A long term view, at odds to accountants but more in keeping with true fans of sport.

  • Comment number 17.

    @ adampsb

    You may wish to check you facts prior to spouting forth that "BT have enough money as well why can't they just bid for the rights and then more people would buy their content"
    I think you'll find that financially, BT are in a massive hole. Their pension deficit runs into billions.

    The sad fact is that SKY have built up a massive empire and now do not want to be told to share it for a small fee. Just as BT were told to share their network after years of monopoly and to a certain extent, price fixing. They now do share their network and are still market leaders, in the same way that SKY would be. The originators are usually the ones that people trust most. I certainly would stick with SKY ahead of BT, virgin etc.

    The issue I have as a SKY subscriber is that I watch little of the rest of the content that I have to buy to get the sports channels & I guess this is what OFCOM are trying to put an end to.

    All that is being asked for here

  • Comment number 18.

    As said previously destroying Sky's monopoly will mean viewers will have to pay more for different subscriptions as broadcasters can't use economies of scale to attract more advertising revenue if they have less sports to show.

    The wages won't come down because of this and would need the sports bodies to intervene if they are to be reduced.

    For football the premier legaue currently sell the rights to their matches together but the big clubs were to get less money then they would sell their rights separately like Real Madrid and Barcelona do. This would just cement the BigFour's position and widen the gap for teams to catch them without a rich owner.

  • Comment number 19.

    I think it is a brilliant idea for ofcom to force sky to slash its prices! There is too much money in football as it is and hopefully this latest break through may encourage premiership clubs in particular to reduce the amount players are paid (some in excess of £100,000 a week) and let us fans go and watch/support our team at a fair price by reducing ticket prices!

  • Comment number 20.

    Your article failed to mention that OfCom will also allow Sky to sell premium services to terrestrial viewers via Freeview. That's an extra 10 million potential customers. I can see that generating much more money than Sky will lose by selling Sky Sports 1 and 2 at 15% less.
    I don't see the point in spending £30 a month for Sky Sports when I only really want to watch a couple of matches a month. On Demand TV is the way things are going because people want to pick and choose what they watch. This gives Sky the opportunity to offer that to everyone in the UK, for a price.

  • Comment number 21.

    Should these proposals from ofcom come into effect then I fear for Premier League players. How will they manage on £100,000 a week instead of £125,000 a week. Maybe they cam claim working tax credits to lift their wage to a livable level.

    The monthly charge for Sky Sports isn't that high when you consider the number of games they show. 1 month subscription is equal to about 1 ticket to a Premier League game. I don't subscribe to Sky Sports, not that can't afford their subscription but they don't show the team I support, who play in the Championship and Sky Sports mainly show Newcastle. I listen to commentary on BBC radio instead.

  • Comment number 22.

    The best thing for sport has to be a pay per view option. This way people pay for what they want to watch not large packages that sky supply with poor programmes ect. This would also open the door to streaming over the internet and the combination of pay per view TV and Pay for streaming should increase the amount of viewers and decrease the illegal streams (If done correctly). This way the people get to watch their games for cheaper and without the matches they don’t want but the likes of the Premier league wouldn’t miss out on too much money because the volume of viewers would increase. ;)

  • Comment number 23.

    I suspect that Sky will (in some way) reduce much, if not all of the current cost to the public, to be able to demonstrate its compliance (anyhow it has probably reached 'market saturation' with the current offerings, at current prices) - it will then come up with some 'new' sports products, higher priced, but much more selective (any guesses as to what these new products might contain?)
    It will be this this 'second tier' of Sky products that will set the 'cat amongst the pidgeons' with the PL, because they will put the premium rates onto specific matches

  • Comment number 24.

    So far all the comments have been how football clubs are going to suffer. But, given that football is Sky's prime asset and they are likely to stop or reduce bid for other sports first and would probably only reduce fees to the Premier League as a last resort.

    It's sports such as Cricket that are most likely to suffer. We've seen countless times how the ECB have squealed at the mere mention of anything that may slightly impact Sky's contribution to thier coffers. Which goes to demonstrate how reliant they are on the Sky cash. It's tragic the way that money grabbing, short sighted administrators (viz Giles Clarke) have sold the soul of the sport to Rupert Murdoch, but we are where we are and a sudden cut in this revenue could have a devastating effect on cricket (and many other sports too).

    Of course it would be fantastic to have much cheaper sport on the TV, however sports are too reliant on the money that Sky generates and this ruling could sever the vital feeding tube that keeps Cricket in this country going.

    The ideal solution would be to have this ruling phased in over a reasonable length of time, allowing sports administrators to realise that having a single source of major funding is not a stable business model. Hopefully (and with people like Giles Clarke running the game I'm doubtful that it will happen) they will heed this warning and source multiple strands of funding that will provide a more stable funding basis in the medium to long term.

  • Comment number 25.

    Personally, I don't think it needed changing at all. I think Sky Sports is a very fair price for what you receive. I don't see how it's fair that Ofcom can just come in and make Sky change their prices. It's their product, they're not ripping anybody off?

    Can't imagine a lot more people will buy it either, just because it's a bit cheaper - but making it available to the masses of digital viewers is a great step. Hopefully for the sake of sports such as Cricket, the extra revenue from this stream will make up for the loss of revenue in reduced pricing.

  • Comment number 26.

    this is good news for sport. there too reliant on sky. what would happen if sky went bust tomorrow exactly?

    the sports would be screwed?

  • Comment number 27.

    I seriously doubt like some are saying this will leed to a reduction in the insane wages players have.

    Instead it will lead to those insanely paid players moving abroad.

    Tores, Febregas, Gerrard, Lampard, Rooney, Tevez, Terry etc Does anyone actually think that when the boss comes to them saying "sorry, sky get paid less by 10% now, your pay is being reduced likewise" That any of these guys will stay?

    They have lifestyles and families, I'd bet that most players would rather move than take a pay gut. Even many so called "true [insert your club here]"

  • Comment number 28.

    Why do people have to mess with things that 1: don't have any concern of theirs and 2: don't need fixing!!

    Let's be honest the full Sky package cost a fortune but so what??!!! Sky is in the strong position it's in for 1 reason: it's a massivley successful business.

    Why should sky be forced to reduce prices? They are being penalised for BTs, virgins & top up tv's inability to do good business.

    Sky made football what it is today, they put more money into cricket, golf, rugby & in particular superleague. Sky have done all the groundwork and the other "amateur" broadcasters want a slice of the cake for free.

    I'm all for cheaper tv but when a company gets penalised for being successful it's too much.

  • Comment number 29.

    OFCOM allow sky to sell servces to their own customers at whatever price Sky wishes, yet they force them to sell their premier service to competitors at reduced prices. That makes no sense to me. Why should Sky have to sell their product to anyone, let alone have to do so at a price dictated by OFCOM?

  • Comment number 30.

    OK it's great for the armchair fan, and this could probably be absorbed by the bigger clubs.
    But what of the smaller clubs? Can League One/Two cope with this?

  • Comment number 31.

    Evening all. I must admit I am surprised by how many people on here are content with the way Sky is run. Ps wednesburybaggie are you sure you do not work for Sky :-)! Ofcom can enforce this because they are the market regulator, whos job is supposed to be to keep the market competitive, something which Sky monopolises at the moment. However, with the Conservatives likely to win the next election and Murdoch backing them, then I cannot see them passing this ruling. This is also the reason for the BBCs recent audit promising to cut money on sports coverage to avoid political parties coming in and changing them.

    Personally pay per view would be the best option and make this market competitive, unfortunately the reason FIFA, the FA, Sky etc etc etc can get away with doing whatever they want is because there is a voracious world appetite for football and so long as there is high demand and money being pumped in nothing will change, but I cannot see fans boycotting in protest.

    As for sports complaining it will stop them investing in grass roots, I would counter this argument by stating that if you are a child in a house without Sky, and hence cannot watch these sports at the pub, no one will be playing them in the future so there will be no need for grass roots. The showing of the Ashes on Sky reduced watchers considerably, its not about getting it for free, however it is about making it available to the vast majority, allowing the people who support their teams to watch. Unfotunately many sports, like football, can now run without the backing of their fans, as their interests are not financially significant enough to matter, so they are not considered in the equation. Look at the FAs decision to hold games on a Friday, this is not in the general publics interest...

  • Comment number 32.

    Why is there a perception that we are somehow missing out if we do not have Sky Sports 1 or 2? The best and most prestigious sporting events are covered excellently live on terrestrial TV (BBC & ITV) e.g. Olympics (Summer/Winter); Commonwealth games; European Athletics Championships; World Cup football and rugby; Six Nations rugby; European Championship football; Wimbledon/French Open/Australian Open tennis championships; Open and Masters Golf; The Grand National and Derby; Formula 1; FA Cup, Champions League, Carling Cup; Darts World Championship; World Championship; Masters, UK, Grand Prix Snooker; the boat race; London marathon .... the list goes on. These sporting events have been talked about by people in the UK for decades and continue to be of interest. To think that we are not served well in terms of sports coverage on British terrestrial tv channels is simply untrue. Match of the Day gives us our weekly dose of Premier League action along with the Football League show (now including some live Championship matches on BBC TV). I can only think of cricket that has unfortunatley sold itself to the highest bidder (Sky) and the sport has undoubtedly lost viewers as a result. The Ryder Cup gets ample coverage as a highlights package on BBC TV.

    Do most people in the UK really want to see sport that has no relevance to a wide British audience; the kind of sport churned out on Sky Sports 1 and 2 after the odd Premier League match has been broadcast? Think about it!

  • Comment number 33.

    Richard Scudamore thinks the market doesn't need fixing, mmmm, I think the Portsmouth scenario and other premier league teams in massive debts I beg to differ. The Bundasliga model (interesting article yesterday bbc) I think is more appropriate.

    Personally I would rather pay sky £40/month for all the sport available - football, rugby whatever instead of what it could be like £20/month for half the sport then paying £10/month to Virgin, £10/month to ESPN and £10/month to BT to see the rest. Other consumers and I are going to lose out if we want to see all the sport.

  • Comment number 34.

    People keep mentioning pay per view as an option, all this will lead to is teams negotiating there own tv rights. Why would the big four accept the same value per match when ties like Man Utd v Liverpool will bring in far more viewers than say Wigan v Bolton. This would mean the so called smaller teams being hit the hardest as a much higher proportion of there income is from sky

  • Comment number 35.

    You've got to love the irony of Sky complaining about this, and then also complaining about the BBCs free websites distorting the market, and being happy to take BTs lines off them (paid for by BT).

    There needs to be a complete separation of content creation and delivery mechanism - for all TV media - including the BBC.

  • Comment number 36.

    The last time autorities tryed to stop Sky's domination we ended up having to pay for 2 seperate subscriptions to watch all Premier League games. Then Setanta went bust for being stupid enough to try and compete.

  • Comment number 37.

    All I personally want is for English cricket to come back to terrestrial TV, or at least be cheaper to watch on Sky.

  • Comment number 38.

    The Sky Sports channels are skewed by the vast amount of money paid for their main event - the Premier league football.

    If you aren't interested in the football, but are interested in one or two of the other sports, then it just isn't worth doing.

    Sky purport to sell the channels separately, but then distribute the sports across them all. If you are after one sport, you have to buy the full set of channels anyway.

    If Ofcom wanted to do it right, they'd force Sky to package the sports better, and let you build the right content for yourself.

    There's no need to force Sky to reduce the channel prices. It should force them to package things better, with pricess appropriate to the value of the sports.

  • Comment number 39.

    I'm not sure we can trust anything that comes out of the BBC on Murdoch, Sky or Ofcom. The poor old Beeb is scared stiff of being dismantled because they've upset Mr Murdoch, the author of the Conservative Party's media policies.

  • Comment number 40.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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