Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
� Four packages including package A (which contains 23 first pick games and is
the most attractive package).
5.49 In other words, as a minimum, rival wholesalers (in aggregate) would have to win:
� Either two packages of Live FAPL Rights including package A; or
� Any three packages of Live FAPL Rights 290 .
5.50 The evidence supporting our position is set out in full in Annex 8. Below we
summarise evidence: (i) demonstrating the particular importance of the Live FAPL
Rights; (ii) showing that Sky’s strong wholesale position will persist unless Sky loses
multiple packages of Live FAPL Rights; and (iii) showing that package A is
particularly important.
5.51 In terms of the first issue, we consider that the particular attractiveness of the Live
FAPL Rights is demonstrated by the following evidence:
� There are a small number of football rights that appeal to a particularly large
number of consumers. Winning these rights would enable broadcasters to create
a channel that appeals to a particularly large proportion of Sky Sports
subscribers 291 . This is shown by survey evidence. For example, 75% of premium
sports channel subscribers who watch sport at least once a week considered that
live FAPL matches were “very important” (Second Pay TV Consultation, Annex 6,
Figure 17). In contrast, the highest rated non-football event (namely “Rugby
Union – Six Nations or World Cup”) was only considered “very important” by 37%
of subscribers.
� Of the most popular football contests, the FAPL has particular characteristics
(regularity and number of games) which make it particularly attractive when
creating a mass market wholesale sports channel (see paragraph 4.80). This is
reflected in the much higher amounts paid for Live FAPL Rights compared to
rights for any other sporting events. The total amount paid for the Live FAPL
Rights to the 2007/08 to 2009/10 seasons was £1,707m which is an average of
£569m per annum 292 . In contrast, the average annual amount paid for live
Champions League rights is £85m and for the right to live FA Cup plus England
home international football matches is £106m (i.e. less than 20% of the FAPL
figure in both cases). The average annual amount paid for the live rights to the
Six Nations rugby union tournament was £40m (i.e. less than 10% of the FAPL
figure) 293 . Given the sheer scale of the difference in the amounts that
290 We recognise that this may underestimate the amount of Live FAPL Rights that competitors would
need to win in order to materially undermine Sky’s wholesale position. For example, it could be
argued that Sky would still maintain its wholesale position if it holds just three packages of Live FAPL
Rights. The cautious view that we have adopted about the extent of entry required may thus be
biased towards concluding that Sky is not dominant.
291 Clearly there are other sports rights that are highly valued by much smaller number of consumers
and it may be viable to launch a channel based around those rights. However such a channel is less
likely to have the wide appeal that would significantly erode Sky’s market share and exert such a
strong constraint on Sky Sports 1 and 2 as to materially erode Sky’s wholesale position.
292 See Annex 10 to First Pay TV Consultation.
293 The annual cost of the rights to live Champions League matches relates to the 2006/07 to 2008/09
tournaments. The annual cost of the rights to live FA Cup and England home internationals matches
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