10/05/2011
The World from Berlin
Pay-TV Ruling Marks 'The End of a Monopoly'
English pub owner Karen Murphy (pictured here at the Red White and Blue in Southsea, Britain) was at the center of this week's David vs. Goliath trial.
A landmark ruling by the European Court of Justice on Tuesday could mean that viewing professional football matches on television will soon get cheaper in Europe -- a decision that will please consumers but cause a collective shudder in soccer leagues and at pay TV providers in a market that is worth billions of euros.
Under current practice in Europe, national football leagues issue contracts licensing the broadcast of professional matches in individual European Union countries that prohibit the licensing companies in those countries from marketing or airing those games in other EU countries. But on Tuesday, the court said practice of selling rights territory by territory in Europe was "irreconcilable" with the aim of a single market.
The ruling means that football fans across Europe will have a choice in the future of whether they subscribe to games of Britain's Premier league, Germany's Bundesliga or other leagues from a German, Greek, British or other Pay TV service, thus creating greater competition.
A Pub Brawl
The case made its way through the courts in a legal dispute between the Premier League and Karen Murphy, who in 2007 showed British football matches at her pub in Southsea using a decoder card for Greek pay TV service Nova, which had the rights to broadcast the games only to its subscribers in Greece. Satellite TV provider BSkyB, however, held the exclusive rights for broadcasts in Britain. By subscribing to the Greek TV service, Murphy managed to save around €6,000 per year. The legal dispute lasted several years, but the European Court of Justice decision is final and cannot be appealed.
For pay TV services and football leagues, the decision is a major blow given that national broadcasters will now be forced to compete with foreign services. After Tuesday's ruling, the price of shares in German pay TV service Sky Deutschland fell by as much as 5 percent, with similar declines for BSkyB in Britain.
In addition, prices for television rights sold by football leagues are likely to drop. Indeed, British broadcaster BSkyB had already threatened to alter its contracts with the Premier League if the court ruled against it.
A Ruling for Consumers, Not Pubs
According to the British daily Guardian, it is believed that British pub owners pay as much as £1,000 (€1,160) a month to Sky for the privilege of showing the matches in their establishments. In Murphy's case, the barkeeper paid an estimated £800 a year for the Greek card. The paper also reported that the Premier League makes in excess of £1 billion on TV deals outside Britain.
The ruling could also affect television rights for Hollywood films and US television programs, many of which are likewise issued on a country-by-country basis. The EU's commissioner for the digital agenda, Neelie Kroes, already stated in the run-up to the ruling that she would address the issues surrounding the licensing of other programming and content within the internal market.
Editorialists in Germany on Wednesday celebrate the decision, arguing it may be a gift to television viewers in Britain and all across Europe.
The Financial Times Deutschland writes:
"The ruling is logical and makes sense. … What remains to be seen is how it will shift the balance between the established pay TV providers. The ruling could strengthen smaller services, or even drive them from the market because they are unable to compete with larger providers in the bidding process (since they will also be able to sell their services across Europe). It also remains to be seen whether it will lead to a drop in prices for professional football subscriptions. What is clear is that, as of Tuesday, a pan-European television market has opened up that might even be attractive to US media companies. But that doesn't necessarily mean that prices will be dampened."
"The real challenge to pay TV providers is elsewhere. Its distribution model -- with expensive receivers, chip cards and long, costly contracts -- no longer has a future. It's real competitor now is the Internet, where television viewers can watch TV using half-legal, but free streaming services that don't require any special receiver. It is only a question of time before Internet or IT giants like Google and Apple begin to provide their own legal offerings without any subscription requirement. That's what the pay TV services should be responding to -- right now. Otherwise it will face a future like that experienced in the music industry: Companies complained long and loudly about illegal copies and discount sales in Eastern Europe and Asia until, finally, Apple and Amazon stepped in with new distribution models and took over their business."
The leftist Die Tageszeitung writes:
"The European Court of Justice has revolutionized the market for live football broadcasts. Exclusivity is a thing of the past and competition is alive. But it still remains an open question who will actually profit in the end."
"Thanks to the new competition, the cost of a football subscriptions for consumers could fall in the mid-term. And if lower prices attract more consumers to pay TV, then the (football) leagues could actually stand to earn a lot more money in the future. It is in no way certain that the football leagues will suffer as a result of the ruling."
The conservative daily Die Welt writes:
"This is good news for all football fans in Europe.... But for professional football, with its finely tared marketing system and often indebted clubs, the pub decision is inconvenient."
"The case is enormously complicated, and centers on competitive regulations. After the final verdict customers across Europe can now look for affordable pay-TV providers. This affects the British channel Sky the most, which will have to lower its prices as a result. In Germany, it provides a new opportunity. The previous charges of up to €30 per month for pay TV were simply too high for many customers, who are also charged as much as €17.98 in mandatory monthly license fees for public television. Lower fees could increase readiness to subscribe to commercial services."
"One-third of total income for German football comes from selling television licenses.... After the verdict this won't work any longer … The Bundesliga won't go under because of this. Instead the absurdly high prices paid for players are likely to waver. Certainly even the conservatively run clubs will have to review their finances."
The center-left daily Süddeutsche Zeitung writes:
"Anyone who believes the victory by pub owner Karen Murphy means the promise of lower subscriber prices through robust competition will be disappointed. The prices will only sink if many channels jockey for the rights of many clubs, which would topple the central marketing system. But this won't happen."
"For the time being those who own the rights will have a lot of work on their hands, and many lawyers will enjoy the extra income. The verdict is a surprise, but it won't start a revolution. With that in mind, Sky TV shares were punished too quickly on Tuesday."
"Unless foreign broadcasters begin offering English-language commentary on matches, it also remains questionable how many Brits or Germans will be willing to save a few pounds or euros in exchange for having to listen to the matches in Greek or other languages."
-- SPIEGEL ONLINE Staff
