BLACA Talk Decoder Insights Daniel Geey, Associate, FFW Sports Group 1 October 2010

Exclusivity has driven rights holders revenue growth My opinion a producer–led tool to extract maximum revenues from subscription audiences Led to largest broadcasters buying up the auctioned PL product Currently have two interesting conflicts. One at the wholesale supply level (Ofcom Decision into the pay-TV market specifically live PL football); The other questioning the legality of the: supply (wholesale) of decoder equipment and purchasing of decoder equipment. Why is giving some context to the decoder debate necessary? difficult to see in isolation larger context is football consumers wanting to look to alternative sources to view live matches i.e. through different authorised broadcasters (Virgin, BT Vision Top up TV) or through Greek or Arab channels Exclusive Broadcasting Context

Ofcom Demanding BSkyB sell its wholesale Sky Sports 1 and Sky Sports 2 channels at a regulated price Why? because no other broadcasters are able to get access to Premier League matches (bar Virgin through a wholesale agreement and ESPN as a rights owner) Sky has an incentive to withhold supply from its competitors as it is competing at the downstream level with the very broadcasters that wish to buy its Sky Sports channels wholesale Alliances Sky and rights holders Rights holders concerned that their largest income source will contract. Sky argues it will not be incentivised to pay millions of pounds for exclusive English Cricket Board (ECB) or Premier League rights if other platform providers can simply purchase the live rights at knock-down prices. Ofcom, BT, Virgin, Top Up TV decision has been viewed by Sky's competitors as a victory against a company that they believe, and Ofcom agrees, to have market power in the wholesale distribution and retailing of its Sky Sports channels. Inter-linkages Decisions in both fora are expected some time in Decoder verdict going in favour of the publicans and suppliers may render the Ofcom process defunct if the way in which PL rights are sold changes irrevocably.

Consequences All about demand variance and elasticity of demand Status quo prevails and territorial protection enshrined vs. Territorial exclusivity outlawed and new rights selling procedure adopted What would it look like? (open for discussion!) One alternative may be PL could start its own channel, distributing it on a non-exclusive, pan-European wide basis, entering into revenue sharing agreements with a whole raft of domestic and European wide platforms. This way the PL could tackle the problem of territorial restrictions by allowing, for example, a UK resident to buy live PL rights from an authorised non-exclusive German platform who is cheaper than any of the non-exclusive UK equivalents