A Tough Choice

British sports fans face a tough decision in the months to come, although naturally it is a decision taken by their politicians as opposed to themselves, but it’s unlikely politicians will go as far as the public would want in this circumstance.

Last week, a review body reported back its conclusions on what sports should remain on free-to-air TV channels in the UK. The conclusion was that some events should be removed (does anyone really care about the Commonwealth Games enough for them to be on the BBC?), but others returns to free-to-air TV (i.e. the BBC or ITV).

The response, naturally, of the governing bodies of the sports listed to return to free-to-air TV was horror. All that nice money from Mr Sky Sports will be no more. Cricket, which generally is no longer on any of the free UK channels, cried foul particularly loudly. Perhaps they have a point. The home Ashes series (England plays Australia every 18 months alternating between playing in England and in Australia), which are scheduled to return to free-to-air, have been shown by Sky Sports the last two occasions they’ve taken place (2006 and 2009). By some statistical chance, it happens England have won both (with a 5-0 hammering in Australia squashed inbetween). Before that, it was the early 1980s before an England team had wrestled the Ashes back from the Aussies.

Cricket authorities say we’ll be back in the stone ages, with bad cricket, if the Ashes go back to free-to-air, and deny the authorities something in the region of £90m a year. So, are fans more keen to watch mediocre cricket for free, or pay to watch decent cricket? Sceptics will argue that fewer kids are playing cricket because they can’t watch it now like they used to be able to, hence it should be free to watch. But what’s the value in it being free, and (maybe) more popular, if there’s no money to affor the nets, pads etc. to help kids develop.

Tricky decisions to be made, and it’s almost certain no serious economic analysis will be brought to bear on the debate…

Slightly old news: Premiership Broadcaster goes Bankrupt

The rights to televise English football are remarkably expensive. Back in 1985 the BBC paid £1.3 million to cover 6 matches. In 2007, between them Sky and Setanta paid £1.7bn. However, it hasn’t all been smiles and happiness since then for Setanta. It was by some distance the smaller partner with Sky in broadcasting the Premiership, and this summer it went bankrupt, unable to fulfil its payments to the Premiership and other sporting institutions in the light of falling subscriptions.

The difficulty is that both Sky and Setanta are subscription channels and hence it is unlikely people will fork out two separate subscriptions, especially as Setanta only paid for lesser quality matches (so matches between the big four, for example, would always be on Sky). With the recession kicking in here in the UK, it seems subscriptions were cut back drastically, leaving Setanta unviable.

The upshot now is that ESPN has taken over Setanta’s matches and will broadcast them in the UK in co-operation with Sky. Which naturally raises the question about Sky’s position in broadcasting the Premiership – it appears to monopolise the market, and has done since the early 1990s.

Setanta is the second company that has failed trying to match Sky – ITV Digital went bankrupt in the early part of this decade after aggressively acquiring the rights to many soccer matches and then finding itself unable to fulfil its obligations.

Should something be done to limit Sky’s dominant position? Setanta was unable to afford the rights to the best Premiership matches, which might have meant people were forced to subscribe to Setanta if the most exciting matches were on that station. Economics would say yes, something should be done, but it is hard to see where the consumer gains if he or she has to pay two or more separate, costly subscriptions, to watch the matches that one subscription used to buy. Of course, more competition may mean that Sky cannot afford high subscription rates, and may have to become more innovative in order to retain customer interest.

In Britain, the rights to the World Cup and European Championships are legally restricted to free-to-air channels, the BBC and ITV, and they negatiate on splitting up the matches up to the final, and both stations show the final. Maybe the rights to the Premiership should be sold to a group of companies, with the lesser matches split between networks by some agreement, and the biggest matches can be broadcast on all the channels at the same time?