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Tuesday, 4 October 2011

The Good the Bad the EU and News International

Probably the only benefit of EU membership is having access to the vast European trade market, with free movement of trade for goods and services, as if it were only one country. That at least is the theory.
 
Karen Murphy, landlady of the Red, White and Blue (very appropriate) pub in Portsmouth had found out otherwise... the English Premier League took exception to her showing live football matches in her pub using a Greek decoder, rather than one supplied by Sky (largest shareholding is the 39.1% owned by those nice people at News Corporation).
 
On the face of it the Premier League should not really be too worried about a football match being shown and, from a strictly financial point of view, they are being paid by Sky for the rights to broadcast matches, regardless of whether or not anybody watches the football. There is possibly an argument that advertisements being shown during the broadcast should be restricted to the geographical area the advertiser has requested, and indeed paid for. Again, there doesn't really seem to be much of a case to answer here as a Greek advertiser is hardly likely to complain about his product being exposed in Portsmouth... and, let's get real that the advertisements coincide with a rush to the bar to get more drinks. What is the last advertisement you saw while watching a football match? I can't remember either.
 
The real issue is that Sky are attempting to control the Premier League by using that well-known and highly effective weapon, money. The astronomical amounts paid for broadcasting rights to the Premier League in the UK serves as additional fuel to the treadmill of inflated salaries and costs now commonplace in football. This is the same 'sport' where someone reputedly 'earning' (now there's a word in need of redefining) £250,000 per week (that was the figure quoted by the News of the World... remember them) can refuse to take off his track suit to go and play football. The result of that action is that his employers are all in a quandary as to what to do next (the simple solution to that will be 'revealed' tomorrow).
 
Now the ECJ (European Court of Justice) has ruled that the landlady (and by inference everyone else) cannot be stopped from choosing who, within the EU, supplies her broadcasting access. This is a victory for commonsense and the European ethos. It might however not be without its pitfalls (although this is a pit I very much look forward to falling into).
 
When it comes to contract renewal, the incumbent UK broadcasting right holder (Sky) will no doubt argue that the rights are worth less and that no other broadcaster can 'afford' the exorbitant broadcasting rights. Cue a lower offer, and one that will not be refused. The immediate effect will be a reduction in the income of the league clubs themselves (as the television rights are 'shared' with them) and the impossibility of raising admission prices to the grounds (whether you think we are in a recession or not, price increases will be resisted). That in turn will mean losses for the clubs, which in 'normal' times they might be able to cover (especially those backed by owners with bottomless wallets). But, the new 'fair play' rules being brought into effect by UEFA will mean that those clubs will not be able to compete in Europe as a club needs to be profitable from its sporting revenue. This will then logically lead to clubs having to reduce their expenses, starting with their wage bill and transfer fees.
 
All in all, the ECJ decision plays into the hands of News Corporation and not the contrary, as be at first perceived.
 
Machiavellian, maybe, but where News International is concerned, expect the unexpected.

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