Football Broadcasting Rights

Tuesday 20th January 2015 Westminster Hall

16:00

[Mr Gary Streeter (in the Chair)]

We now move to the next debate. Will colleagues who are leaving please do so quietly and speedily? We are turning to the important issue of the Ofcom consultation on football broadcasting rights, and it is a pleasure to call Thomas Docherty.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

It is a pleasure to serve under your chairmanship again so quickly, Mr Streeter. The subject of this debate is probably slightly less pressing for many people, but is none the less of great interest to all our constituents.

You will recall, Mr Streeter, that John Major famously evoked an image of cricket being played on village greens for the Britain that he thought we should all aspire to, but of course the reality is that football holds a special place in people’s hearts in all four parts of the United Kingdom and is, indeed, our national sport. On Saturday afternoons, up and down the United Kingdom, football supporters put on their coats and woolly scarves and hats and travel to support their teams. This cultural phenomenon stretches back 150 years in the United Kingdom. More recently, the growth of television has enhanced people’s enjoyment of football. It is probably fair to say that “Match of the Day” still holds a special place in everyone’s heart—the theme music, which I will not try to emulate this afternoon, still makes the hairs on the back of everyone’s neck stand up when it comes on. It is great to see “Match of the Day” enjoying its 50th anniversary this year.

Of course, there has been a revolution in football in the United Kingdom in the past 20 years with the advent of the Premier League and, in particular, Sky Broadcasting. I should probably declare a constituency interest, in that Sky is our third largest private employer, employing some 2,000 people in my constituency and contributing, at a conservative estimate, more than £30 million a year to the local economy. I am incredibly grateful for the work that Sky does locally and for the opportunities it provides to local people.

I share the concerns of many—I do not know whether the Minister would care to comment on this—about the way Sky is advertising gambling products alongside football. I do not know whether the Minister is aware of whether Ofcom or the Advertising Standards Authority plans to look at gambling and particularly the spot gambling that we see on Sky Sports News and during football matches. None the less, Sky has been an absolute force for good in revolutionising the way football is understood and enjoyed and the calibre of football. Football is now without doubt a cosmopolitan sport, not just in the Premier League but throughout the English leagues and in Scotland, with players drawn from throughout the European Union, from the Commonwealth and, indeed, from emerging footballing nations. That is a sign of a multicultural sport. I believe that it is not just because we have got away from mullets and short shorts that there is no great desire to go back to 1980s football.

It is interesting to look at the attendance figures for football grounds—as always, I am indebted to the House of Commons Library for its assistance. When the Premier League began in 1992-93, the attendance figures for Premier League grounds showed that only two thirds of the capacity was being taken up by supporters—average attendance in the stadiums of Premier League clubs was only 70% in 1992-93. Now, despite the economic conditions and the fact that the cost of football has risen for supporters, 95% of seats are taken at Premier League games. If we bear it in mind that 40% of games are on television—live to broadcast—that goes to show that the Premier League and the broadcasters have delivered a product that people want to buy.

[Mark Field (Cities of London and Westminster) (Con)]

It is worth making the point also that of course a number of larger stadiums have been built, from Old Trafford to the Emirates. The capacity at many of the premiership clubs is markedly higher than was the case before, so the statistic possibly slightly understates just how much more popular the game has become, notwithstanding the televisation. Many of us remember that in the 1970s and ’80s, when only a handful of games were shown at the weekend, it was felt that TV would be the ruination of football, yet in many ways it has proved to be the absolute opposite.

[Thomas Docherty]

The hon. Gentleman is entirely right. That, indeed, is my point. Vast sums of broadcast revenues are paid in. From memory, the deal that BT and Sky have with the Premier League is worth just over £3 billion for the current broadcast period. The hon. Gentleman refers to the very modern stadiums. I was at the Emirates a couple of years ago for a Champions League game. It is an absolutely modern, first-class, wonderful facility, and that is repeated up and down the country.

The problem, if I may digress for a second, involves those clubs that aspired to get into the Premier League, because of those riches, and have fallen along the way. They built those stadiums because they were holding on to the dream, the aspiration, of reaching the top flight and then found themselves in great difficulty. I do not believe that that is the fault of the Premier League or the broadcasters; it was a business decision taken by the boards of those clubs. Those of us who are a little older, Mr Streeter, will recall some of the great names of English football that have found themselves in very difficult situations in recent years. One need only think of Leeds United, whose board gambled everything. Reckless decisions were made by the board to aim constantly not just for Premier League status, but for Champions League status, with the additional riches that that brings.

It is worth remembering that the broadcast deal brings huge benefit to the grass roots as well. I am very grateful to the English Football Association for the briefing that it provided to me and, I think, to other hon. Members, which shows that hundreds of millions of pounds are coming down to grass-roots football as a result of the deal. The Premier League is also right to point out that through the parachute payments and the solidarity payments paid to lower league clubs, it continues to support grass-roots football. Whether we represent constituencies in Scotland, England, Northern Ireland or Wales, it is without doubt the case that every young boy’s ambition is to play in the Premier League.

[Mark Field]

The hon. Gentleman makes a perfectly valid point. It is important that we stress that although many people feel that footballers are earning untold riches, certainly compared with those of a generation or two ago, and perhaps too much money, from the television funds does go directly to the talent, there is still huge investment in the grass roots of the game, which has transformed the game over the past 20 years. Does the hon. Gentleman agree that unfortunately in terms of this debate relating to Ofcom, there has not really been any serious attempt to demonstrate how just showing more matches, as Ofcom suggests, would lower the cost to the subscriber? The TV deal that has been done, which has gone onwards and upwards, none the less does sustain and is of interest to—

[Mr Gary Streeter (in the Chair)]

Order. Thomas Docherty.

[Thomas Docherty]

I am grateful for that short speech. The hon. Member for Cities of London and Westminster (Mark Field) makes a serious point, which I have raised with Ofcom myself, that there is frustration among many fans that even after Sky lost a quarter of the fixtures, it did not reduce its price by a quarter. Can the Minister say whether he believes that Ofcom should be taking that up with Sky—whether the fact that the reduction in the number of games has not been passed on as a reduction to the subscriber should be considered as part of the broader picture?

I want to talk specifically about the splitting of the packages. At the moment, some 154 of the 380 games are shown live on BT or Sky. In the next round, the intention is to increase that to 168, so we are talking about approximately 40% of fixtures now, rising to 45% in the next period. Genuine concerns have been raised by the FA and supporters’ groups about the drift away from Saturday afternoon. Football clubs and publicans report a pattern: a lot of match day customers either watch a game beforehand and go along to their local club at 3 o’clock, or go to their local club first and then watch the 5.30 pm game at the pub or elsewhere. Ofcom has refused to rule out allowing the 3 o’clock slot to be looked at, but even if it is prepared to allow that, there are real concerns that moving more and more fixtures away from 3 o’clock to Saturday lunchtimes, Saturday afternoons, Sundays or even Friday nights—I believe that there are 10 games planned for Friday nights—will have an impact on the wider football community.

I am sure you know, Mr Streeter, from your constituency that many local, grass-roots clubs play on Sunday or on Saturday morning. If more and more fixtures are shown on Saturday at lunchtime or on Sunday, they will attract people who otherwise would go along to support a club or to play grass-roots football. Ofcom must bear that in mind, because not only does it have a duty towards competition in the narrow sense as it relates to broadcasters, but it has a broader social responsibility for the good of the game in the United Kingdom.

I am aware that many fans, particularly of some bigger clubs—I include Chelsea in that for the benefit of the Minister, who I know is a Chelsea fan—complain that their clubs’ fixtures are regularly moved. They see the initial fixture on a Saturday afternoon, so they make travel arrangements, book time off work and spend a lot of money on tickets for their families, but at a relatively late stage the broadcasters shift the game. My cousin, Philip Morgan, complained to me about that on Facebook the other day—a big Manchester United fan, he is very frustrated about that practice. I hope that the Minister will assure us that the Government will make it clear to Ofcom that it must bear those things in mind when it carries out its investigation. The interests of the supporter who goes through the turnstile are absolutely critical.

I wish to make two points before I conclude. One is about individual deals versus collective bargaining. I am conscious that Conservative colleagues in the room do not always agree with collective bargaining, but I am sure that Members of the House would agree that collective bargaining is one of the strengths of the Premier League. That is not the case in La Liga, for example, where Barcelona, Real Madrid and other major clubs negotiate their own deals. As a result, large clubs become richer and richer, while smaller clubs struggle a lot. In last year’s Premier League payout, however, the total payment to the winner was only 1.5 times the size of the payment to Cardiff City, who finished bottom of the table. All clubs receive the same amount of money as the initial broadcast share, there is an element based on prize money and there is a small element based on how many times they are shown. It is important that Ofcom understands that collective bargaining must be maintained.

My final point concerns a good book that can, I am sure, be found in the Commons Library: “The All American War Game” by award-winning British journalist James Lawton. It came out about 30 years ago, when Channel 4 was covering American football for the first time, and it looked at the state of American football in the United States. James Lawton talked at great length about the fact that in the US, people can watch American football on a Friday, Saturday and Sunday; if they have cable, they can watch college games, the NFL and the local high school game. He was absolutely blown away by the idea of American football saturation, culminating in the Monday night game. At the time, of course, we only had four channels in the United Kingdom, and Channel 4 was very new.

Fast forward—pardon the pun—30 years. We now have a situation where football is readily available seven days a week. We can watch a Friday night game, perhaps a Scottish game or one of the 10 Premier League games that will be available; there is a Saturday lunchtime game, and there is a Saturday evening game. There are two games on a Sunday and there is a Monday night game. This evening, League cup fixtures are taking place—I am sure that the Minister will be taking a close interest in those. We have Champions League and Europa League football on a Thursday. My constituents tell me that, as football mad as they are, there is a limit to how much football we need on the television.

I am conscious that I am eating into the Minister’s time, but I think that the issue is important. I respect the fact that Ofcom has the lead on it, but I hope that the Government will make it clear to Ofcom that they expect the regulator to be the supporter of the supporters and not the champion of media interests.

16:16

[The Minister for Culture and the Digital Economy (Mr Edward Vaizey)]

I am grateful to appear under your chairmanship, Mr Streeter. I thank the hon. Member for Dunfermline and West Fife (Thomas Docherty) for giving us the opportunity to debate this important issue, in which Members of the House clearly take a significant interest. It has been useful to hear the range of views—both of them, thanks to the able contribution of my hon. Friend the Member for Cities of London and Westminster (Mark Field). Today’s debate concerns a topic about which the public and many Members of the House are passionate—football—and a far-reaching issue that directly affects consumers and the economy, namely competition in the broadcasting market.

The last time I debated football matters in this House, I engaged in some good-natured football banter. That spectacularly backfired on me, but it taught me a valuable lesson: football fans are extremely passionate about their clubs. Let me say on the record that although I am a Chelsea fan, I have nothing but admiration for all other football clubs, particularly Manchester United.

Competition in markets is important in all parts of the economy. It can drive down costs, improve consumer choice, encourage innovation and boost growth. A thriving, competitive industry reacts readily and at low cost to changing consumer demands. In an ideal world, made up of highly competitive markets, new entry would be unimpeded, products would be supplied at minimum cost to the consumer, there would be a lot of innovation and we would encourage economic growth.

Football remains as great a passion for people in this country as it has ever been. The hon. Gentleman pointed to the extraordinary success of the Premier League over the past 20 or so years. It has been a phenomenon, and it has become part of the fabric of our country and our culture. It is arguably the most exciting, compelling and competitive league anywhere in the world, with many of the best managers and players in the world coming here to ply their trade, and has some of the safest football stadiums to be found anywhere.

The popularity of football is making a big impact on our creative industries. As Minister for Culture and the Digital Economy, I note that clubs have not only their own websites and but often their own TV channels. Football is almost an anchor tenant for some television channels, radio, print and internet media, all of which use it to attract consumers.

[Thomas Docherty]

Although Crystal Palace are my second team, I forgive the Minister his Chelsea links. I have seen Sky’s new XD technology, which it piloted at the Ryder cup—XD is 16 times the quality of high definition. Does the Minister agree that that is the type of creative technology breakthrough that we should be supporting in the United Kingdom?

[Mr Vaizey]

I do. Football and sport are a mode of content that encourages technical innovation. I remember watching football broadcast in 3D by Sky, and I thought it was compelling, although for some reason it has not had the consumer impact that we expected. HD television was probably partly driven by football, and it is another example of the kind of innovation that the hon. Gentleman talks about.

Sports content remains critical to the success of a lot of our broadcasting industry. It is common sense to say that the success of pay TV has been built on sport. It could be argued that it is a chicken and egg situation in the sense that the Premier League has benefited greatly from the innovation that has come from the way in which Sky has broadcast the Premier League, but equally Sky has benefited from having those rights. Indeed, about one in four people who watch pay TV say that sport is their must-have content. Premier League football is hugely valued by those customers, particularly as it is not available live on free-to-air platforms. Content such as the Premier League drives consumer decisions about pay TV subscriptions, so it is not a surprise to find such an inquiry taking place.

Broadcasting rights to key content remain in the hands of a small number of providers, mainly BT and Sky, and there was a complaint to Ofcom by Virgin Media last September. People often miss this point—they think that Ofcom has somehow woken up one morning and just decided to call an investigation, or that perhaps the Government have asked Ofcom to call an investigation—but the investigation, like most Ofcom investigations, emerged from one part of the ecology, in this case Virgin Media, complaining about its perception of the behaviour of another part of the ecology, namely the Premier League and, behind it, Sky and BT. As a result of that complaint, Ofcom decided to open an investigation into how the Premier League sells the live UK audiovisual media rights for Premier League football matches.

Virgin Media’s argument is that the collective selling of live UK television rights on an exclusive basis by the Premier League for matches played by its member clubs is in breach of competition law. Virgin Media’s key argument is that the proportion of matches made available for live television broadcast under the current rights deal is lower—154 out of 380 matches a season—than in some other leading European leagues. Although, as the hon. Gentleman pointed out, the new auction will see the figure go up to 168 matches a season, Virgin Media would argue that more matches are available for live television broadcast in other European countries.

[Thomas Docherty]

The Football Association and the Premier League point to the fact that the attendance of away fans in other leagues, such as La Liga, is very poor because there is such availability of broadcast. Does the Minister accept that point?

[Mr Vaizey]

It is not for me to accept or reject that point, but I will elaborate on my answer. Virgin Media would say that, because fewer matches are broadcast, consumers pay more money for their pay TV packages because there are fewer matches to go around and therefore less competition—that is the argument in its crudest form. If this were a court or a competition appeal hearing, an extremely expensive Queen’s counsel would no doubt pick me up on how I have characterised the argument.

As the hon. Gentleman indicates, there is a counter-argument. First, the Premier League would talk about its success over the past two decades. Both he and my hon. Friend the Member for Cities of London and Westminster have pointed out the increase in live attendance at Premier League matches over the past 20 years and the commercial success of clubs due to the way the Premier League sells the rights to live matches. I was inadvertently in the position of, in effect, supporting a socialist solution: the Premier League selling its collective rights. The hon. Gentleman made a compelling point, which will be of particular interest to my hon. Friend, on whether we could introduce collective selling into the City of London, whereby the top-performing traders collectively negotiate their salary with the rest of the company, so that the difference between the highest earners and the lowest earners is somewhat smaller—but I digress, and no doubt that is not helpful.

[Mark Field]

I would not describe myself as a socialist in any way, but the collective system has worked very well, which is greatly to the credit of all concerned. It is worth putting it on the record that Sky has done a terrific job of transforming the broadcasting of the game, in tandem with the BBC and other providers. I feel that Virgin Media’s complaints are unfounded. There is no evidence to suggest either that there is dissatisfaction with subscription rates or that subscription rates would be lowered if we had more games on TV.

[Mr Vaizey]

I cannot be drawn on that point, except to say that I have described Sky’s acquisition of Premier League rights as a bit of a chicken and egg situation. Sky’s success has been built on having those Premier League rights, but there is no doubt that Sky has brought extraordinary innovation to broadcasting Premier League games.

[Thomas Docherty]

On attendances and popularity, is the Minister aware that, even with so much live football on a Saturday and even with the high attendances, the BBC reports that 4.5 million people tune in on a Saturday night to watch “Match of the Day”? Another 1.5 million watch the repeat and 2 million watch “Match of the Day 2” on a Sunday. Does he agree that that shows that football fans have a genuine appetite to watch recorded highlights and to see the punditry and technology to which he refers while also going along on a Saturday afternoon to support their team? We should protect that.

[Mr Vaizey]

I absolutely agree. The post-match punditry on the Chelsea victory at Swansea on Saturday’s “Match of the Day” was some of the best punditry I have seen for a long team. As I said earlier, we have talked about solidarity and the Premier League’s business model, which is heavily reliant on its broadcasting deal. The deal is important for Premier League clubs, but it also helps the football league pyramid. Having put Virgin Media’s arguments, I stress the hon. Gentleman’s point that the FA’s position of preserving the 3 o’clock kick off for a number of matches that are not broadcast in order to maintain attendances at live football matches is very important.

I have little time left, so I will simply help the hon. Gentleman in the best way I can by explaining the process. Ofcom will gather further information using its powers under the Competition Act 1998. The case is still at an early stage, and it does not mean that the Ofcom investigation will go the full length. Ofcom has to reach a view on whether there is sufficient evidence of infringement of competition law, and I understand that it hopes to reach an initial view towards the end of March. Ofcom is also mindful of the timing, given that the auction of UK audiovisual rights is under way and is expected in the spring of 2015.

I have obviously been briefed on Ofcom’s investigation process. Ofcom has emphasised to me—this will be music to the hon. Gentleman’s ears—that the heart of its investigation is the best interest of fans and consumers and that it is aware that fans and consumers benefit from the principle of collective selling. This is a complex issue with a number of arguments to be made. I have outlined some of those arguments, but it is important to stress in my last few seconds that Ofcom, quite rightly, is an independent regulator. I assure anyone watching this debate that the hands of politicians will not be directing how Ofcom goes about its investigation. The arguments on both sides of this debate have been well rehearsed. I have every confidence that Ofcom will conduct its investigation in a scrupulous and fair manner and will come to clear decisions at each stage in a timely and helpful way.