Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
5.44 The Commitments set transparency and non-discrimination conditions for the bidding
process. The Commitments apply for the six seasons from 2007/08 onwards, or two
rounds of bidding. The Commitments require six packages of live rights, each for 23
matches, to be made available. Each FAPL season is divided into 38 “rounds” of 10
matches. In each round, three or four matches are broadcast live. Different packages
allow a first, second, third and/or fourth pick of those matches (see Figure 41 below).
A first pick match is likely to be more attractive to final consumers than a fourth pick
match. No one bidder is allowed to acquire all six packages and packages must be
bid for on a stand-alone basis i.e. the amount bid cannot be conditional on the
number of packages a bidder wins.
Figure 41 The six packages of Live FAPL Rights sold in 2006 and 2009
Source: First Pay TV Consultation, Annex 10, page 22
5.45 In the 2006 the FAPL sold the rights to the 2007/08 to 2009/10 seasons. [ � ]. In
light of those bids, the FAPL chose to award three packages of Live FAPL Rights to
Sky (B, E and F) and to hold a second round of bidding for the remaining three
packages (A, C and D). That second round was [ � ] and resulted in the FAPL
awarding a fourth package of Live FAPL Rights to Sky (A) and two packages to
Setanta (C and D).
5.46 In 2009, the FAPL sold the rights to the 2010/11 to 2013/14 seasons. As in 2006, [
� ]. This time, the FAPL chose to award four packages of Live FAPL Rights to Sky
(A, B, E and F) after that initial round. A second round of bidding was held for the
remaining two packages. [ � ]. As a result, the FAPL awarded a fifth package to Sky
(C) and the final package to Setanta (D).
In order to materially undermine Sky’s wholesale position, Sky would need to lose
the majority of the Live FAPL Rights
5.47 As explained above in paragraphs 5.6 to 5.9, we are assessing the extent of market
power held by Sky by reference to the dominance threshold. Under this framework
we therefore consider whether potential competition is sufficiently strong to
undermine the dominant position suggested by Sky’s market shares. In other words,
the relevant issue is not whether small scale entry is possible/viable (for example by
a channel that only broadcasts a small number of sports events). Rather the question
is whether entry on sufficient scale to materially undermine Sky’s wholesale position
is likely.
5.48 We consider that Sky is likely to maintain its wholesale position if it wins the majority
of the Live FAPL Rights. By “majority” we mean:
150
Package
� Either any five packages of Live FAPL Rights; or
A B C D E F Total
No. of first pick matches 23 5 10 38
No. of second pick matches 23 8 7 38
No. of third pick matches 23 9 6 38
No. of fourth pick matches 15 9 24