Virgin on the Ridiculous: The £5bn Football Broadcasting Deal

This week Sky and BT paid over £5bn to the Premier League for its live domestic broadcasting rights in a three year deal. Such was the competition that the amount paid was a reported 70% uplift on the previous astronomical deal.

Prior to the announcement, Virgin Media who purchases Sky Sports and BT Sports on a wholesale basis from its rivals to sell on to its own retail customers had complained to Ofcom that the collective selling of live Premier League rights breached competition law. Such claims related to the number of Premier League matches made available being lower than in other European leagues, where more live matches are sold. Virgin argue that the exclusive provisions in the Premier League auction process significantly raise the price broadcasters have to pay and that as a result British subscribers pay too much money to access premium content as costs are passed on by way of higher prices. Interestingly, just before the auction winners were announced, Virgin asked Ofcom to temporarily suspend the award, pending the outcome of Ofcom’s investigation. Virgin failed to freeze the auction but the investigation continues. Structural changes in the way the rights are sold and how the auction is carried out could be a possibility, should Ofcom rule that the Premier League is breaching the competition rules.

With Virgin competing on various fronts with BT and Sky for broadband, mobile, Pay-Tv and phone line rental, there is a wider narrative developing around broadcasters becoming triple play and quad play providers. Indeed, BT incentivises its customers to take its broadband offering through marketing its BT Sport channels for free. Sky conversely offers free broadband if consumers sign up to its premium TV channels. With Sky entering the mobile market next year and BT’s purchase of EE, live premium sports rights are seen as one of the core drivers for new bundled quad-play consumer offerings. Virgin already offers ‘quad’ bundles and its Pay-Tv complaint to Ofcom may be the start of round of interlinked competition and regulatory skirmishes involving Pay-Tv, broadband and mobile. Watch this space.

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