Football Broadcasting Rights

Lord Vaizey of Didcot Excerpts

Tuesday 20th January 2015 Westminster Hall

[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.