Pay-TV channels in the firing line

Date: 14/11/1996

By Chris Johnstone

THE European Commission is set to add to the mounting pressure on pay-TV sports channels , already under intense scrutiny by national courts and regulators.

The move also comes in the wake of a demands from the European Parliament this week that governments draw up lists of protected sports events which must be accessible to ordinary viewers, rather than simply being sold off to the highest bidder The vote by MEPs' is the latest in a series of challenges to the pay-tv channels' practice of luring viewers by buying up exclusive rights to broadcast sporting events.

It comes after a Dutch court last week raised a questionmark over the power of the football authority, the Koninklijke Nederlandsche Voetbal Bond (KNVB), to sell the Dutch pay-TV channel Sport 7 exclusive rights to broadcast league and cup matches live.

In an initial ruling, the court broadly supported the Premier League club Feyenoord's argument that it - and not the Dutch football association - was entitled to negotiate sale of broadcasting rights for its home games.

Sport 7 is likely to face more bad news next week, when European Commission officials are due to draw preliminary conclusions on whether the consortium behind the live football broadcaster breaks competition rules.

Officials make no secret of the fact that they see big problems in the way the Sport 7 consortium is constructed. They are worried that the KNVB's membership of the group will put it in a prime position to win a fresh contract when the current seven-year deal expires.

Under the present agreement, Sport 7 has the right to make an initial bid to retain the exclusive broadcasting rights when they expire and make another after rivals bids have been submitted, even though in theory it is not supposed to know the level of rival offers.

The Commission is likely to demand measures to separate the KNVB from the rest of the consortium, which includes electronics giant Philips (which owns PSV Eindhoven), the ING bank, media group Endemol, Dutch national phone company PTT Nederland and the country's main cable companies.

Some observers are, however, already questioning whether Sport 7 will survive the first seven years. The number of subscribers paying cash for the service since it was launched at the start of the season has been disappointing, with football fans preferring to wait a few hours to watch the highlights on the public television channel NOS.

In the UK, the restrictive practices court has launched a similar probe into the Premier League's ability to sell the rights to 60 live games a year to Rupert Murdoch's BSkyB channel.

BSkyB appears on safer ground with the Commission, as it is not subject to a specific probe by competition officials. However, the Premier League and BSkyB must win European approval for its latest four-year broadcasting rights deal to the year 2000. The Premier League says it expects no problems after tailoring the latest agreement to Commission demands and dropping a clause which would have given BSkyB preferential rights to renegotiate the deal. A broadly similar pact signed in 1992 between BSkyB and the Premier League was cleared by the Commission.

More problems could arise, however, from Competition Commissioner Karel van Miert's promise to review the whole issue of television companies buying up exclusive rights to popular sports events.

Commission officials say broadcasting rights to these competitions are the launching pads for pay-TV programmes, but could also prevent rivals entering the market.