tag:theconversation.com,2011:/us/topics/broadcasting-rights-32134/articlesBroadcasting rights – The Conversation2017-11-12T09:45:11Ztag:theconversation.com,2011:article/867822017-11-12T09:45:11Z2017-11-12T09:45:11ZWhy it’s time competition law was applied to sport in South Africa<figure><img src="https://images.theconversation.com/files/193773/original/file-20171108-27037-195x465.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> </figcaption></figure><p>An increasing number of popular sports clubs, like Manchester United and Real Madrid, have their stocks publicly traded in major stock exchanges around the world. This underlines the view that sport is no longer simply a cultural spectacle. It’s also become <a href="https://repository.up.ac.za/bitstream/handle/2263/23738/dissertation.pdf?sequence=1">big business</a>.</p>
<p>This applies to South Africa, where football, rugby and cricket have become big commercial affairs. Because sport isn’t formally recognised as an economic sector in South Africa, figures are hard to come by. But data from the South African Department of Sports and Recreation <a href="http://www.srsa.gov.za/MediaLib/Home/DocumentLibrary/Case%20for%20Sport%20-%20Oct%202009%20(Final).pdf">estimates</a> that in 2009 sporting activity contributed about 2.1% to the country’s GDP – that’s about R41 billion.</p>
<p>It’s beyond doubt that the contribution of sport as a sector to the country’s economy has increased over the past decade. Not only does sport create paid employment within the game, it also supports other economic sectors such as tourism and infrastructure development.</p>
<p>But, like many other sectors of the South African economy, the business of sport is riddled with unfair practices that probably infringe the <a href="http://www.compcom.co.za/wp-content/uploads/2014/09/pocket-act-august-20141.pdf">Competition Act</a>. Until recently, for the most part these had been allowed to go unchecked by competition authorities. </p>
<p>There are signs that this might be changing. Following an investigation, the country’s competition commission has announced it will be <a href="http://www.compcom.co.za/wp-content/uploads/2017/01/FOOTBALL-AGENTS-TO-BE-PROSECUTED-FOR-PRICE-FIXING-002.pdf">prosecuting</a> football agents, their companies and the South African Football Intermediaries Association <a href="https://www.iol.co.za/sport/soccer/psl/competition-commission-target-sa-soccer-agents-for-fixing-prices-11540391">for</a> “fixing prices and other trading conditions”. </p>
<p>The case relates to the practice of agents fixing the price or commission that has to be paid when players and coaches change clubs. This is also the case when players and coaches sign or renew corporate sponsorship deals. </p>
<p>The commission’s case against football agents is significant because it brings sport in line with standard rules of business, and recognises the important role that sport plays in the economy. The case relates specifically to football agents, but the principle it’s trying to assert has relevance and will apply to the actions of agencies in other sporting codes as well. </p>
<p>Applying competition law to sport will promote fairness, professionalism, efficient resource allocation and economic development. The case also brings South Africa in line with other countries and regions in the world. In <a href="http://ec.europa.eu/competition/sectors/sports/overview_en.html">Europe</a>, for example, various sporting activities have already been subjected to the scrutiny of competition law. </p>
<h2>Threats to competition</h2>
<p>There are lots of practices in sport that are viewed as being “normal” but that should in fact be cause for concern because they may undermine the Competition Act. </p>
<p>One example are rules for sports leagues and competitions that benefit, favour or give one club – or a few clubs – an advantage over others. What’s often ignored is that sport clubs in the same league or competition are in effect in competition with each other for what is often a significant amount of prize money. </p>
<p>The competition principle could be infringed if clubs of equal status in the same association or league are deprived of the opportunity to compete – or if they’re placed in a competitive disadvantage – without a justifiable sporting or operational reason. This could amount to an exclusionary act in terms of section 8 of the Competition Act. </p>
<p>Sports clubs are also in competition with each other for corporate sponsorships. Some big clubs enjoy a significant proportion of the market share. This gives them the financial power and prestige to attract players and coaches from other clubs. </p>
<p>This power may be used in ways that amount to an abuse of dominance from a competition law perspective. The most common example of anticompetitive conduct in this context is what is known in sports circles as “taping up”. This is where top - and often wealthy clubs – secretly court players or coaches from other clubs, promising them better deals. It would amount to an abuse of dominance if this was done without first getting the consent of the club to which the player or coach is contracted. </p>
<p>Competition law also supports the view that using one’s financial strength to destabilise rivals, for example by poaching their key staff, may be <a href="http://uir.unisa.ac.za/bitstream/handle/10500/21908/thesis_munyai_ps.pdf?sequence=1">anticompetitive</a>. </p>
<p>Broadcasting, the holy grail of modern sports, may at times also fall foul of the Competition Act. The main areas of concern are the terms and conditions of broadcasting rights. For example, the dominance of a preferred broadcaster – and excluding rivals from the market – could be entrenched when a sports league, competition or association awards a lengthy and generally exclusive broadcasting contract to a dominant player.</p>
<p>Ticketing for sport games could also be another problem area. A dominant ticketing company could be using its power to persuade or force associations or clubs to enter into exclusive ticketing agreements with it. This may raise competition concerns because it excludes rivals, or limits their ability to sell tickets.</p>
<h2>The way forward</h2>
<p>There is wide recognition that sport has transformed itself from a social activity into an economic activity with potential to spur economic development. Stakeholders involved in sport may soon need to realign their rules, policies and practices to ensure compliance with the provisions of South Africa’s Competition Act.</p><img src="https://counter.theconversation.com/content/86782/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Phumudzo S. Munyai does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The business of sport in South Africa is coming under the focus of the Competition Commission on concerns that some practices may be uncompetitive.Phumudzo S. Munyai, Senior Lecturer: Competition Law, University of South AfricaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/852832017-10-11T12:30:53Z2017-10-11T12:30:53ZPremier League giants go hunting for a bigger slice of the pie … and it will harm the game<figure><img src="https://images.theconversation.com/files/189647/original/file-20171010-17673-1028mlt.jpg?ixlib=rb-1.1.0&rect=71%2C40%2C3301%2C2182&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/bangkok-thailand-august-5-logo-manchester-690392746?src=z46AN09ocNAiiWwZaVqSpw-4-69">charnsitr/Shutterstock</a></span></figcaption></figure><p>When the English Premier League was founded in 1992, clubs agreed an egalitarian system for distributing Sky TV money. Skip forward 25 years, and that model is under threat after the 20 Premier League clubs <a href="https://uk.reuters.com/article/uk-soccer-england-finance/smaller-premier-league-clubs-to-argue-for-balance-in-tv-cash-split-idUKKCN1C80TX">met to discuss</a> how to share future international TV rights.</p>
<p>Overseas broadcasters have discovered that Premier League football is a key vehicle to deliver subscriptions. The money paid to broadcast football has increased considerably. Glancing back to 1992 shows broadcast <a href="http://www.totalsportek.com/money/premier-league-tv-rights-deals-history-1992-2019/">revenue of £192m</a>. In the current cycle (2016-19), these payments total about £8.1 billion (£5.1 billion from the UK and £3 billion international). The cost of international rights is expected to <a href="http://www.dailymail.co.uk/sport/football/article-4525808/Premier-League-earn-billions-thanks-foreign-TV-deals.html">rise further</a>. </p>
<p>Six clubs now want a change in the formula for spreading this source of revenue. They <a href="https://www.nytimes.com/2017/10/03/sports/soccer/premier-league-tv.html">want a bigger</a> slice of the pie but, perhaps unsurprisingly, many other clubs are opposed to the proposals. No consensus has yet been reached, and a vote on the matter has been deferred until November.</p>
<h2>The Big Six?</h2>
<p>The dissent in the ranks is driven by the “Big Six” clubs – Arsenal, Chelsea, Liverpool, Manchester United, Manchester City and Tottenham Hotspur. They believe they are the key force behind the popularity of the Premier League in overseas territories, and are therefore entitled to greater financial reward.</p>
<p>In 2016, the Big Six received 70% of Premier League matchday income, 77% of commercial income, but “only” 43% of broadcast income. In their mind, they are effectively subsidising the other clubs. The argument put forward is that overseas TV fans will only tune in to watch the Big Six. They evidence this by the viewing figures for individual matches. </p>
<p>Premier League TV rights are initially divided into a number of “pots”. Domestic rights consist of three pots: 50% divided equally, 25% based on the number of TV appearances, and 25% on final league position. International rights are split evenly between all 20 clubs. </p>
<p>Overall, the ratio between the club generating the highest amount of Premier League TV income in 2016/17 (Chelsea) and that of the club bottom of the league (Sunderland) was 1.6:1. So for every £100 of Premier League TV income generated by Sunderland, Chelsea earned £160. This ratio in other European countries is at least 2:1. </p>
<p>The Big Six also believe that the present TV arrangement <a href="https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/sports-business-group/deloitte-uk-sport-football-money-league-2017.pdf">gives them a financial disadvantage</a> in relation to other large European clubs, such as Real Madrid and Barcelona. </p>
<p>Premier League chairman, Richard Scudamore, has <a href="http://www.telegraph.co.uk/football/2017/09/27/premier-leagues-big-six-fail-first-attempt-increase-tv-share/">proposed a change</a> for international rights whereby 65% would be shared evenly and 35% based on league position (“merit payment”). But this has caused a falling out between club owners. The Big Six want more, ideally identical to the domestic TV rights formula. </p>
<p>One side effect of these proposals is that money paid to relegated clubs under “parachute payment” rules is likely to decrease, as they would not be entitled to merit payments. This would result in about £40m of existing parachute payments moving from relegated clubs to those remaining in the Premier League. </p>
<p>The chart below shows how things would change if Scudamore’s proposal was approved. </p>
<h2>Driving revenue</h2>
<p>Professional team sports need to benefit from the concept of <a href="http://www.tandfonline.com/doi/abs/10.1080/24748668.2012.11868603">competitive balance</a>. First pioneered in the 1950s and taking its origins from North American team sports, the theory suggests that to make a strong competition, you need a contest with equally matched opponents. </p>
<p>However, what tends to happen is that professional sport leagues produce games between teams with <a href="http://onlinelibrary.wiley.com/doi/10.1111/sjpe.12066/full">unequal market power</a>. One team becomes dominant, reducing the spectacle of the competition and, therefore, its value to spectators, broadcasters and sponsors. </p>
<p>Professional team sports are intrinsically different from other businesses, in which a firm prospers if it can eliminate competition and establish a monopoly supplier position. In sport this doesn’t work. Competitive opponents are required at a level that produces excitement and jeopardy.</p>
<p>This is important in relation to the vote on Premier League TV rights. The league has even <a href="https://www.premierleague.com/this-is-pl/the-premier-league/final-standings">praised itself</a> for keeping broadcast distribution relatively equal compared to other big European leagues. And as a result the games tend to be more competitively balanced too. Smaller teams can invest money to secure better playing talent and compete more effectively. </p>
<p>It is true that top teams in the league have a bigger appeal to fans in a <a href="http://www.bbc.co.uk/news/business-27369580">global market</a>. But it is also true that what makes the Premier League such an attractive product is that, on any given day, any team has a realistic chance of beating another. And in extremis, a team like Leicester <a href="http://www.bbc.co.uk/sport/football/35988673">might even win the league</a>.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/dYgHALKrY2o?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
</figure>
<h2>The thin end of the wedge?</h2>
<p>If clubs agree to the Scudamore proposals, or accede to Big Six demands, then the outcomes will be challenging. </p>
<p>First, when most international rights are renegotiated from 2019 it is likely they will see an increase in value, <a href="http://www.telegraph.co.uk/football/2017/10/05/premier-league-big-six-want-greater-share-overseas-tv-money/">by an estimated £1.2 billion</a> over three years. This will increase the money gap. If distributed evenly, every club in the Premier League would receive an extra £20 million a year. </p>
<p>Let’s not forget, the Big Six clubs are also far more likely to qualify for UEFA competitions, such as the Champions League, where they have a £30-90m financial advantage from separate TV rights. </p>
<p>The proposals will make the Premier League less competitive, potentially reducing the value of the competition’s brand and making it less attractive to viewers. The Leicester miracle will look more and more like a one-off; more likely will be Crystal Palace’s season so far, which has seen the London club lose its opening <a href="https://www.standard.co.uk/sport/football/manchester-united-4-crystal-palace-0-marouane-fellaini-hits-two-as-palace-lose-seventh-straight-game-a3647606.html">seven games without scoring a goal</a>. </p>
<p>When the clubs vote, any proposal will require a two-thirds majority to be approved. The Big Six must therefore convince another eight clubs that they have a sniff of tasting the increased riches on offer for league success. That will deliver another hit to the egalitarian spirit of 25 years ago. Turkeys don’t normally vote for Christmas but if these ones do, the future of the Premier League looks less competitive and ultimately, worth less too.</p><img src="https://counter.theconversation.com/content/85283/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Will England’s top-flight teams really decide to weaken their global blockbuster brand?Rob Wilson, Principal Lecturer in Sport Finance, Sheffield Hallam UniversityDan Plumley, Senior Lecturer in Sport Business Management, Sheffield Hallam UniversityKieran Maguire, Senior Teacher in Accountancy and member of Football Industries Group, University of LiverpoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/666832016-10-11T05:14:16Z2016-10-11T05:14:16ZBuyouts mean the future of Australian video-on-demand is hard to picture<figure><img src="https://images.theconversation.com/files/141174/original/image-20161011-3903-1y6nqdd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The hugely popular Game of Thrones could be a crucial drawcard for Foxtel Play's new viewers.</span> <span class="attribution"><span class="source">AAP Image/Village Roadshow Production</span></span></figcaption></figure><p>The dust is showing no sign of settling on Australia’s video-on-demand (VoD) media landscape. The past week has seen two seismic shifts which will have a flow-on effect on almost anyone who watches subscription-based television.</p>
<p>First came the news of <a href="http://www.abc.net.au/news/2016-10-04/presto-to-disappear-as-seven-sells-stake-to-foxtel/7900778">Foxtel’s takeover of Presto</a>, with the latter’s customers being transferred to Foxtel Play when Presto shuts down next year.</p>
<p>Then the ailing VoD service <a href="https://www.quickflix.com.au/">Quickflix</a> gained a surprise stay of execution, being <a href="http://www.smh.com.au/business/media-and-marketing/quickflix-snapped-up-for-13m-by-us-entrepreneur-20161004-gruqoq.html">saved by a US buyer</a> after going into <a href="https://theconversation.com/a-shake-up-in-australias-busy-tv-industry-as-quickflix-calls-in-the-administrators-58487">voluntary receivership</a> earlier this year.</p>
<p>The shakeup has left viewers wondering where their subscription fees are going to end up, and what content they will be able to access once the merry-go-round stops.</p>
<h2>Quickflix’s future?</h2>
<p>Quickflix’s problems began in 2014, when former stakeholder HBO sold its shares to Nine Entertainment. The following year the shares were transferred to Stan, Nine’s new joint VoD venture with Fairfax Media. </p>
<p>When Quickflix went into voluntary receivership, it stated Stan’s unwillingness to bargain with potential buyers as a key reason for its <a href="https://theconversation.com/a-shake-up-in-australias-busy-tv-industry-as-quickflix-calls-in-the-administrators-58487">demise</a>.</p>
<p>Quickflix has now been saved, although it is not clear what it will become or what its focus will be. US media entrepreneur Erik Pence has paid A$1.3 million, and the holding for the purchase, Karma Media, plans to retain 24 employees and pay entitlements to former employees. </p>
<p>There will <a href="http://www.smh.com.au/business/media-and-marketing/quickflix-snapped-up-for-13m-by-us-entrepreneur-20161004-gruqoq.html">reportedly</a> be more investment in marketing and a shift towards more niche content. This latter strategy has been a globally successful tactic for other VoD and online platforms such as <a href="http://netflix.com">Netflix</a>, <a href="http://youtube.com">YouTube</a> and <a href="https://www.fullscreen.com">Fullscreen</a>. </p>
<p>But it is unclear whether Quickflix’s new service will support the production of Australian content in any way – or even whether it will primarily offer movies, television series, or both. This makes it difficult to analyse the impact its re-emergence will have on the Australian VoD landscape.</p>
<h2>Hey Presto</h2>
<p>In contrast, the future of Presto has been made very clear indeed. Foxtel has acquired Seven West Media’s interests in the service and confirmed that it will cease on January 31, 2017. </p>
<p>This arguably makes Presto the first real casualty of the battle that has sprung up in Australia’s crowded VoD landscape.</p>
<p>Presto has been constantly reported as struggling for subscribers against competition from Netflix and Stan. A recent Roy Morgan <a href="http://www.roymorgan.com/findings/6839-netflix-stan-presto-subscription-video-on-demand-may-2016-201606141025">report</a> from this year showed how far Presto was behind its competition. </p>
<p>Presto had 142,000 subscriptions, less than half of the 332,000 signed up to its local competitor Stan. Even combined, these numbers are far short of international giant Netflix, which has <a href="http://www.roymorgan.com/findings/6839-netflix-stan-presto-subscription-video-on-demand-may-2016-201606141025">1,878,000 Australian subscriptions</a>.</p>
<p>Foxtel plans to move Presto’s subscribers over to its internet-delivered service Foxtel Play by the end of this year. In a <a href="https://www.foxtel.com.au/about/media-centre/press-releases/2016/foxtel-revamps-its-streaming-video-service.html">media release</a> Foxtel promised that “Presto customers will get access to more premium first run television programs and more recent movies than ever before” – raising the question of whether they were holding back on content before the takeover.</p>
<p>The Foxtel Play service also may not be what current Presto customers are expecting, nor is there a guarantee that it will end up costing the same.</p>
<h2>Does Foxtel really want to compete?</h2>
<p>It is clear that Foxtel is trying to compete with current VoD services, as underlined by its <a href="https://www.foxtel.com.au/about/media-centre/press-releases/2016/foxtel-revamps-its-streaming-video-service.html">recent announcement</a> that Foxtel Play entry prices will be cut to A$10 from the current A$25. But Foxtel Play’s <a href="https://www.foxtel.com.au/content/dam/foxtel/foxtelplay/support/pp-change/foxtel-play-pp-changes.pdf">subscription pricing structure</a> is much more complicated than other VoD services. </p>
<p>Unlike <a href="https://www.netflix.com/au/">Netflix</a> or <a href="https://www.stan.com.au">Stan</a>, which charge a flat fee for all content (although Netflix charges extra fees for more screens and HD qaulity), Foxtel Play has different prices for different content packages, much like Foxtel’s pay TV pricing structure. The content on Foxtel Play is not HD, although will <a href="http://decidertv.com/page/2016/10/7/foxtel-play-foxtel-go-will-make-the-switch-to-high-definition-foxtel">reportedly</a> be upgraded in 2017. </p>
<p>Foxtel Play’s <a href="https://www.foxtel.com.au/about/media-centre/press-releases/2016/foxtel-revamps-its-streaming-video-service.html">packages</a> include a basic offering of Documentary, Lifestyle or Kids programming at A$10 each per month, plus Premium Drama and Premium Entertainment options at A$15 each per month. Customers can also add Sport (A$25 per month) or Movies (A$20 per month) on top of these. So it seems likely that many customers end up paying more than those subscribing to other VoD services.</p>
<p>At first glance, Foxtel shutting down Presto could appear to be a way in which it can gain new Foxtel Play subscribers while dissuading viewers from defecting to Stan or Netflix. But the actual numbers may be small, according to Roy Morgan’s recent <a href="http://www.roymorgan.com/findings/6990-most-presto-subscribers-already-have-netflix-stan-or-foxtel-too-august-2016-201610050930">research</a>. </p>
<p>Of the 143,000 Australian homes with Presto, 77% already have an alternative VoD or pay TV service, which could include Netflix, Stan and Foxtel. Of Presto households, 55% also use Netflix and 27% have signed up to Stan. </p>
<p>Meanwhile, almost half of Presto subscribers already have Foxtel, mainly through its traditional set-top box service. Foxtel itself has <a href="https://mumbrella.com.au/foxtel-admits-subscriber-figures-include-presto-users-but-claims-cable-still-biggest-growth-driver-311968">admitted</a> to using Presto subscription numbers to bump up its own quoted subscriber growth numbers for 2015. </p>
<p>But Foxtel has two key advantages over Netflix and Stan. The first is HBO content, most notably the wildly popular series Game of Thrones. Next year Foxtel will <a href="https://www.foxtel.com.au/about/media-centre/press-releases/2016/foxtel-revamps-its-streaming-video-service.html">significantly increase</a> the amount of HBO content it offers.</p>
<p>The second advantage is sport, which fittingly is where the fiercest competition is set to play out among rival platforms.</p>
<h2>Into the sporting arena</h2>
<p>Sport streaming is poised as the next battleground in Australian video streaming, VoD and video subscriptions. If planned changes to <a href="http://www.acma.gov.au/Industry/Broadcast/Television/TV-content-regulation/sport-anti-siphoning-tv-content-regulation-acma">anti-siphoning rules</a> are made, the battle will become even more intense.</p>
<p>Foxtel Play’s pricing will allow access to Foxtel’s sports package for A$35 a month, A$15 cheaper than its pay TV sports package. But is it cheap enough?</p>
<p>Telcos themselves have now become sports broadcasters, with both <a href="https://www.telstra.com.au/tv-movies-music/sport">Telstra</a> and <a href="http://www.optus.com.au/shop/entertainment/sport">Optus</a> heavily invested in sports streaming – the latter after <a href="https://theconversation.com/optus-the-new-player-in-australias-sports-media-rights-battle-50069">sensationally pinching</a> the rights to the Premier League from Foxtel. </p>
<p>Seven’s recent broadcast of the Rio 2016 Olympics also <a href="https://theconversation.com/the-rio-olympics-are-a-test-case-for-the-future-of-sports-broadcasting-63589">raised many questions</a> about future sports broadcasting and media rights. With Seven no longer involved with Presto, it could set its sights on sport and furthering its partnership with Telstra.</p>
<p>If Telstra were to <a href="https://theconversation.com/bed-fellows-no-more-its-foxtel-versus-telstra-in-battle-for-online-subscribers-56672">sell its stake</a> in Foxtel, it may decide to invest more money in becoming a direct competitor to Foxtel Play.</p>
<p>This will open opportunities for streaming not only for major international competitions, but leagues that currently enjoy less funding and publicity. The Women’s AFL could be a perfect place to start – offering a homegrown product to homegrown viewers.</p><img src="https://counter.theconversation.com/content/66683/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc C-Scott is a board member of C31 Melbourne (Community Television Station).</span></em></p>With Quickflix saved but Presto on the way out, it’s hard to predict who will emerge as the winners as battle for video-on-demand viewers intensifies.Marc C-Scott, Lecturer in Screen Media, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.