The Political Economy of Television Sports Rights
By T. Evens, P. Iosifidis and P. Smith
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The Political Economy of Television Sports Rights - T. Evens
The Political Economy of Television Sports Rights
Palgrave Global Media Policy and Business
Series Editors: Professor Petros Iosifidis, Professor Jeanette Steemers and Professor Gerald Sussman
Editorial Board: Sandra Braman, Peter Dahlgren, Terry Flew, Charles Fombad, Manuel Alejandro Guerrero, Alison Harcourt, Robin Mansell, Richard Maxwell, Toby Miller, Zizi Papacharissi, Stylianos Papathanassopoulos, Caroline Pauwels, Robert Picard, Kiran Prasad, Marc Raboy, Chang Yong Son, Miklos Suksod, Kenton T. Wilkinson, Sugmin Youn
This innovative series examines the wider social, political, economic and technological changes arising from the globalization of the media and communications industries and assesses their impact on matters of business practice, regulation and policy. Considering media convergence, industry concentration, and new communications practices, the series makes reference to the paradigmatic shift from a system based on national decision-making and the traditions of public service in broadcast and telecommunications delivery to one that is demarcated by commercialization, privatization and monopolization. Bearing in mind this shift, and based on a multi-disciplinary approach, the series tackles three key questions: To what extent do new media developments require changes in regulatory philosophy and objectives? To what extent do new technologies and changing media consumption require changes in business practices and models? And to what extent does privatization alter the creative freedom and public accountability of media enterprises?
Benedetta Brevini
PUBLIC SERVICE BROADCASTING ONLINE
A Comparative European Policy Study of PSB 2.0
Karen Donders, Caroline Pauwels and Jan Loisen (editors)
PRIVATE TELEVISION IN WESTERN EUROPE
Content, Markets, Policies
Tom Evens, Petros Iosifidis and Paul Smith
THE POLITICAL ECONOMY OF TELEVISION SPORTS RIGHTS
Petros Iosifidis
GLOBAL MEDIA AND COMMUNICATION POLICY
Michael Starks
THE DIGITAL TELEVISION REVOLUTION
Origins to Outcomes
Palgrave Global Media Policy and Business
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The Political Economy of
Television Sports Rights
Tom Evens
Ghent University, Belgium
Petros Iosifidis
City University London, UK
and
Paul Smith
De Montfort University, UK
© Tom Evens, Petros Iosifidis and Paul Smith, 2013
Foreword © Raymond Boyle 2013
All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission.
No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6– 10 Kirby Street, London EC1N8TS.
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First published 2013 by
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To my parents, who encouraged me to practice sports, and to my brother, who used to treat me each time I got injured!
TE
To my twin boys, Haris and Yiannis, who are passionate about sport because it provides them with entertainment, a hobby, and exercise!
PI
To my sons, Matthew and Alexander. I look forward to many years of watching sport on television together!
PS
Contents
Figures and Tables
Foreword by Raymond Boyle
Acknowledgements
Introduction
Commerce, culture and regulation
The political economy of television sports rights
Objectives and structure
Country reports
Part I Television and Sport: Commerce, Culture and Regulation
1 The Sports–Media–Business Complex
Introduction
Sports media as a mass market
The global sports business
The sports–media–business complex
Sport and new-media technology
Conclusion
2 The Sports Broadcasting Market
Introduction
The US and European sports broadcasting systems
The sports rights market
Conclusion
3 The Social and Cultural Value of Sport
Introduction
The socio-cultural power of sport
Critical assessment
Conclusion
4 The Importance of Free-to-Air Sports Broadcasting
Introduction
The distinctive European PSB model
The rise of pay-TV and the impact on PSB
The public sphere and cultural citizenship
PSB and sport
Pay-TV and sport
Should PSBs buy sports rights?
Conclusion
5 Competition Law and Sports Broadcasting
Introduction
Competition law
Competition law and the sports rights market
Competition regulation and the sports programming market
Conclusion
6 The Regulation of Access to Major Sporting Events
Introduction
The regulation of access to major sporting events in Europe and beyond
Major events legislation: the debate
Conclusion
Part II Country Reports
7 Australia
Introduction
Broadcasting in Australia
Competition policy
Anti-siphoning regulation
Conclusion
8 Brazil
Introduction
The Brazilian broadcasting market
Regulatory framework
Conclusion
9 India
Introduction
Broadcasting in India: from monopoly to polyphony
Sports broadcasting and the Indian television market
The regulation of sports broadcasting in India
Conclusion
10 Italy
Introduction
Major players in the broadcasting market
The development of digital television
Regulatory framework
Football rights: from individual to collective selling
The value of broadcasting football rights
Conclusion
11 South Africa
Introduction
Television broadcasting in South Africa: transformation and marketisation
The South African television sports broadcasting market
The regulation of sports broadcasting in South Africa
Conclusion
12 Spain
Introduction
Developments in the broadcasting market
The political and legal context of Spanish football
Football: governing structures
Individual marketing of television rights
The structure and management of football clubs in Spain
Exploitation of broadcasting rights
Conclusion
13 United Kingdom
Introduction
Sport and television in Britain: From PSB to pay-TV
The regulation of UK sports broadcasting
Competition law and the UK sports broadcasting market
Conclusion
14 USA
Introduction
Broadcasting in the USA
Regulation of sports rights
Conclusion
Conclusion
Assessing regulatory approaches
A balanced approach to sports broadcasting regulation
A dual regulatory approach
Notes
References
Index
Figures and Tables
Figures
Tables
Foreword
The study of the developing relationship between sports and the media industries continues to provide a rich environment for communication researchers and scholars. The transformation from the analogue age to digital has disrupted and reshaped many parts of the communications industry. However the focus of this book reminds us of the continuing importance and centrality of television in shaping the experience of millions through its mediation of sports. By focusing on the political economy of television sports rights, the authors make a compelling case for the importance of grounded empirical research informing our analysis and thinking with regard to the broader media industries.
What emerges from this book is that while it is important to recognise the ways in which social and digital media are reshaping aspects of the sports-media nexus, we need to remain sharply focused on the key political, cultural and economic context and framework within which television sports rights are sold and ultimately disseminated. Why? Well, despite the hype that often surrounds the impact of new media, it is television rights and their ability to generate substantial revenue that remain central to the financial underwriting of a core of elite professional sports, that, for example in the case of football, operate within and across national and global communicative spaces.
This research offers both a convincing political economy framework through which to engage with the arena of television sports rights and then augments this with a set of specific case studies that move from the EU (UK, Spain and Italy), to key non-EU territories (USA and Australia) and to key emerging television sports markets such as India, Brazil and South Africa. The area of television rights research can sometimes appear to engage at great length with the technical and legal debates and arguments around the issue of rights, while seemingly ignoring the broader cultural and social context within which the television industries operate. This book offers equal weighting to both approaches, as it guides the reader through the complex regulatory frameworks that shape television sports rights from the local, through national, to EU and international contexts.
At the heart of this research journey is recognition of the tension between the cultural and the commercial drivers of the sports rights market. This tension is often enshrined in the frameworks of, for example, the EU as it implements both competition law in this area, as well as major events legislation. Throughout the book we see examples of policymakers and shapers seeking to balance ‘public interest’ and ‘fair competition’ issues. We also examine the very real challenges of balancing the often competing commercial and cultural goals of rights holders and a range of broadcasters from across the pay-TV sector and those operating in the public service domain.
The range of the case studies presented here gives a truly international flavour to a set of debates that find echoes across the international television and sports industries. They also serve to remind us that while we live in an increasingly interconnected media environment (exemplified by the discourses around digital media), the national dimension of policymaking remains important and has not, as some would have us believe, disappeared. To that end German football television content, for example, remains most compelling within Germany. Of course new ways of sharing and accessing content, the key characteristic of digital media, open up the potential for global markets and indeed new revenue streams, but the authors remind us of the need for some caution, as evidence to date of this process remains problematic. What the book clearly suggests is that the even in the digital age, the national political, economic and cultural context remains important in shaping the interaction between those two stalwarts of popular culture; television and sports.
This book makes an important intervention in the policy debate that surrounds media rights and the balancing of cultural and commercial concerns. While it is about a particular area of the television industry, the debates that it engages with resonate and echo beyond sports, into other areas of television content. These cultural issues and business models may play out differently of course in these other areas – indeed that is part of the argument being made here about the specific nature of the sporting industry; however, this research also deserves a wider audience than just those directly involved in the analysis of the sports rights market.
Raymond Boyle
Centre for Cultural Policy Research
University of Glasgow, March 2013
Acknowledgements
This volume would not have been written without the support of City University London, De Montfort University, Leicester, and Ghent University, Belgium. We would like to express our gratitude to the anonymous reviewers of the book proposal for their welcomed comments and suggestions at the beginning of this effort and also to colleagues who commented on earlier incarnations of this volume. Thanks also to Raymond Boyle and to the co-editors of the ‘Global Media Policy and Business’ Book Series at Palgrave Macmillan, who accepted this volume as part of the series. Felicity Plester and Chris Penfold at Palgrave Macmillan have provided helpful advice throughout this project and we are grateful for their enthusiasm and support. The responsibility for any remaining errors, omissions and confusions is of course entirely ours. Every effort has been made to trace all copyright holders, but if any have been inadvertently overlooked, the publisher will be pleased to make the necessary arrangements at the first opportunity.
Although this book was very much a joint effort there was inevitably some division of labour. Tom Evens concentrated on the commercial dimension of the relationship between sport and television (Chapters 1 and 2) and was also responsible for the country reports on Australia, Brazil and the USA. Petros Iosifidis focused on the social significance of sport and the value of free-to-air broadcasting (Chapters 3 and 4), as well as the country reports on Spain and Italy. Finally, Paul Smith examined the regulation of sports broadcasting (Chapters 5 and 6) and produced the country reports on India, South Africa and the United Kingdom.
Introduction
Commerce, culture and regulation
Sport is big business. In 2010, the global sports industry was estimated to be worth over $120 billion, and this figure is predicted to rise to close to $150 billion by 2015 (PricewaterhouseCoopers, 2011).¹ The growth of sport as a global industry is largely the result of ‘a marketing mix’, which includes sponsorship, merchandising, endorsement of products and services, corporate hospitality and, most importantly of all, the sale and exploitation of broadcasting rights (Blackshaw, 2009). For instance, in 1960, total broadcast revenues from the Olympic Games held in Rome were $1.2 million. By 2008, the total paid for broadcast rights to the (Beijing) Olympics had escalated to $1.7 billion. Europe accounts for the largest proportion of the total global media rights market, followed by North America, but the fastest growth rates are projected to be in Latin America, where media rights are the largest single source of revenue at 38.8 per cent of the total (PricewaterhouseCoopers, 2011).²
The commercial significance of sport is perhaps most clearly illustrated by the importance attached to television sports rights by European pay-TV broadcasters. Facilitated by the ‘marketisation’ of broadcasting (see below), the last couple of decades or so have witnessed the rise of pay-TV broadcasters, such as British Sky Broadcasting (BSkyB) (UK), Canal+ (France) and Sky Italia (Italy), who have used exclusive sports rights – and football (or soccer) rights in particular – as a ‘battering ram’ to open up and/or attempt to dominate their respective national pay-TV markets. Furthermore, the same strategy has also been employed by pay-TV broadcasters in other parts of the world, including Fox (Australia), The Sports Network (Canada), ESPN Star Sports (India), Globo/SporTV (Brazil) and MultiChoice/SuperSport (South Africa). At least partly as a result, many sporting leagues and/or organisations have experienced a significant increase in the commercial value of the television rights to their sport. For example, in 2012, the English Premier League agreed, by some distance, the most valuable deal in its history, with BSkyB and the telecommunications firm, British Telecom, agreeing to pay a total of £3.018 billion (€3.73 billion/$4.66 billion) for domestic television rights (seasons 2013–14 to 2015–16). A major part of this book focuses on the commercial dimension of sports broadcasting. One of the book’s key themes is the commercial relationship between television and sporting organisations and, in particular, the different strategies employed in the buying and selling of television sports rights.
Just as importantly, however, this book also highlights the social and cultural value of sport and sports broadcasting. A second major theme of the book is that sport is about more than just commerce. Sport is a social and cultural activity practised and valued by millions of people across the world. For instance, Lefèvre and Ohl (2012) have detailed how sport is a form of cultural capital that people can either actively participate in or consume (as spectators). Moreover, these findings echo those of earlier studies by MacClancy (1996), who argued that sport has a potentially unifying power that can transcend boundaries of class and gender, and Brookes (2002), who also highlighted the social element of sport and stressed the importance of accessibility to sport in order to promote participation and social cohesion. In fact, the European Commission (2007) has even gone so far as to identify a number of key roles played by sport in European society, namely: health-promotion, education, a social role, recreation and a cultural role (see Chapter 3). In a similar vein, sports broadcasting may also be seen to have the potential to bring about socio-cultural benefits, such as cultural citizenship and civic participation. It is from this general perspective that a high value is often placed on free-to-air television coverage of sport by public service broadcasters or commercial television networks. After all, to maximise the social and cultural value to be gained from sports broadcasting, coverage needs to be available and affordable to all. For example, in the UK, the opening ceremony of the London 2012 Olympic Games was watched by over 24 million viewers (an 81 per cent audience share) and marked the beginning of a shared Olympics experience for British viewers that was in no small part made possible by the availability of the Games on free-to-air television (Price, 2012).
Albeit in different ways, these contrasting perspectives on television and sport – commerce and culture – have each led to the extensive regulation of sports broadcasting by national governments, as well, as in the case of many European countries, the European Union (EU). This book provides an overview of the key issues and debates raised in relation to the regulation of sports broadcasting. The main argument made here, and the third major theme of the book, is the need for a regulatory approach that balances the commercial priorities of sports organisations and private media companies with the wider social and cultural benefits to be gained from free-to-air sports broadcasting. In this way, the book seeks to make a timely contribution to on-going policy debates about the future regulation of sports broadcasting. Perhaps most significantly, by giving equal weight to the social and cultural value of free-to-air sports broadcasting, the book offers a perspective that runs counter to the regular calls for deregulation that emanate from many of the major commercial interests that often dominate sports broadcasting. Specifically, this book urges both national governments (and the EU): first, to resist the arguments of pay-TV operators and some sports organisations to reduce or water down existing legislation designed to preserve major events for free-to-air television; and, secondly, to adopt a more rigorous approach in the application of competition law to the sports broadcasting market in order to challenge the market power of dominant pay-TV broadcasters. It is our hope that this book will help to ensure that the interests of citizens, as well as the concerns of commercial interests, will come to the fore in future debates concerning the regulation of sport on television.
The political economy of television sports rights
There is a symbiotic relationship between media and sports organisations. On the one hand, sport provides a valuable source of content for media organisations (commercial and public service). Whilst on the other, the media (mainly television broadcasters) provide an increasingly important source of revenue for sports organisations (either directly from the purchase of broadcast rights, or indirectly via exposure for sponsors). As with actual sporting contests, however, within the bounds of this relationship, all of the participants are ‘playing to win’. Broadcasters (commercial and public) compete against one another for lucrative sports rights contracts, as well as against sporting organisations in a contest to secure the ‘best’ price for the rights on offer. Sports organisations also compete to promote their sport in a contest for public attention with other sporting events and organisations. And finally, at risk of stretching the analogy, there is also an on-going contest between politicians, regulators, sporting organisations and broadcasters over the legal and regulatory framework for sports broadcasting. This book is concerned with understanding how these contests and, in particular, the relationship between media and sports organisations has been (and is) shaped by a combination of economic, political, socio-cultural and technological forces.
Despite the obvious political and economic significance of sports broadcasting, most academic literature on sport and the media has tended to focus largely on the media’s representation of certain events, groups or individuals (for example: black athletes; celebrity athletes; sport and national identity, and so on) and/or the impact of sports coverage on the audience (for example, fandom) (see Whannel, 1992; Boyle and Haynes, 2009; Rowe, 2004; Sandvoss, 2003). By contrast, the focus here is on market and regulatory issues (rather than issues of representation and/or audience behaviour) and as a result we adopt an analytical approach focused on what is often termed the political economy of the media. Broadly speaking, the political economy approach to understanding the media is concerned with how the way that media organisations behave (and the content they provide) is shaped by the economic and political context in which they operate. More specifically, our analysis of the relationship between media and sports organisations takes place against the backdrop of two key developments. First, the last couple of decades have witnessed a period of almost constant technological change within the media industries, which has seen the development of new broadcast delivery technologies, such as satellite and digital television, as well as the growth of new-media technologies, chiefly the internet. To date at least, the former has had a more significant impact on sports broadcasting than the latter. In fact, in contrast to much of hyperbole surrounding the growth of new-media technologies, this book serves to highlight the continued primacy of television broadcasting. Whilst not seeking to understate the potential impact of new-media technologies on sports broadcasting markets and their regulation, the book emphasises the unrivalled capacity of live television broadcasting to provide a focal point for national and global audiences (for example, the Olympic Games; FIFA World Cup finals; the NFL Superbowl), as well as a major source of revenue for both broadcasters and sports organisations (for example, rights to English Premier League football, US Major League Baseball rights, Indian Premier League cricket). Although the internet, mobile phones and social media are increasingly the engines driving interaction, hype and interest, television broadcasting continues to generate the lion’s share of income from the sale of sports rights. For example, in 2010, the leading new-media company, Yahoo, paid just US$7.5 million for the UK online distribution rights to English Premier League football highlights for three seasons (Connolly, 2012). By contrast, in 2009, the BBC agreed a three-season deal worth around £170 million for television highlights of Premier League matches (Sweney, 2012). In the words of a recent review of sports broadcasting in the UK, ‘the long predicted market in internet sports rights has not so far materialised’ (Davies, 2009: 11).
Secondly, just as importantly, the relationship between sports organisations has also been shaped by a general shift towards the ‘marketisation’ of broadcasting, particularly in Europe, but also in the USA and throughout much of the rest of the world (Murdock, 2000; Murdock and Wasko, 2007; Freedman, 2008: 50–2; Hesmondhalgh, 2007: 105–36). Inspired by neo-liberal ideas, over the last couple of decades, marketisation has been pursued through four major policy and/or regulatory interventions, employed in various combinations:
• Privatisation (the sale of public assets to private investors). This aspect of marketisation has not been prominent in the USA for the simple reason that there were relatively few public assets to be sold in the first place. However, numerous European governments have overseen the complete or partial privatisation of publicly owned broadcasters (for example, TF1 in France) and telecommunications operators (for example, Deutsche Telekom in Germany).
• Liberalisation (opening previously restricted markets to new entrants). For example, the 1996 US Telecommunications Act allowed for cable and telecommunications companies to enter each others’ markets and relaxed restrictions on cross-media ownership. Similarly, during the late 1980s and 1990s, EU directives facilitated the opening up to competition of both European broadcasting (Television without Frontiers, renamed Audiovisual Media Services) and telecommunications markets.
• Reorienting of regulation (away from the defence of the public interest, however defined, to the promotion of ‘fair’ competition). In Europe, this trend is best illustrated by the increased influence of the European Commission’s Competition directorate over key areas of media regulation, such as mergers, the definition of ‘state aid’ with regards to public service broadcasters as well as, of course, the buying and selling of sports rights (Wheeler, 2004). In the USA, the removal of long-standing public interest regulations during the late 1980s and 1990s, such as the Fairness Doctrine and Fin-Syn rules, could also be seen to represent the prioritisation of competition (and free speech) concerns over any wider interpretation of the public interest.
• Corporatisation (urging or obliging publicly financed organisations to seek additional sources of income and to maximise their market value). For example, successive British governments have urged the BBC to pursue commercial opportunities (mostly overseas) via its commercial arm, BBC Worldwide, and also to reduce its operating costs (Born, 2004).
Alongside new developments in broadcasting technology, such as encryption and digitalisation, these political initiatives have facilitated the growing ‘commodification’ of broadcasting. Perhaps most notably, throughout Europe the universality of broadcasting traditionally offered by public service broadcasters has been eroded by the growth of pay-TV, and even in the USA the main free-to-air commercial networks face increased competitive pressure from pay-TV services available via cable and satellite. All of which means that ‘more and more television services are offered for sale at a price and [are] available only to those who can afford to pay’ (Murdock, 2007: 43). It is against this essential backdrop that the remainder of this book considers the relationship between broadcasting and sports organisations and, in particular, the importance of the regulation of sports broadcasting.
Objectives and structure
In summary, the main objectives of the book are to:
• Analyse the different strategies employed in the buying and selling of sports rights.
• Highlight the main competition (collective selling) and public interest (role of free-to-air broadcasting) issues raised in relation to the television sports broadcasting market.
• Assess the impact of new-media technologies on the buying and selling of sports rights.
• Explore the social and cultural character of sport and discuss whether the market can be relied upon to deliver the benefits of engagement in culture and sport; and,
• Illustrate all the above with detailed examples from a range of national case studies, including three major European countries (UK, Spain and Italy), two significant non-EU markets (USA and Australia), and three emerging markets (India, Brazil and South Africa).
The book is divided into two main parts. Part I provides an overview of the main commercial, cultural and regulatory issues related to sports broadcasting. Part II is then dedicated to analysing these issues in more detail via eight different country reports. More specifically, the first part of the book consists of six chapters, each exploring specific themes related to the media and sport. Chapter 1 (‘The Sports–Media–Business Complex’) focuses on the commercial dimension of sport and provides an understanding of the mutual interactions between various stakeholders in the sports–media–business network. Most significantly, this chapter highlights one of the most important features of today’s global sports business, namely its high dependency on cable and broadcasting revenues. Notwithstanding the popularity of new-media services and social media outlets, television remains the leading sports medium, in both cultural and economic terms. It remains to be seen how, if at all, global technology firms, such as Google and Apple, will affect the institutionalised balance of power in the global sports market.
Chapter 2 (‘The Sports Broadcasting Market’) discusses salient issues in relation to the current and future value of sports rights. In particular, this chapter considers the economic context of the sale, purchase and exploitation of sports rights and its impact on the value of sports rights. For instance, on the one hand, as the number of media companies able (and willing) to submit bids for premium sports rights declines, reduced competition (on the demand side) is likely to depress the value of future media rights deals. This trend is exacerbated by the current economic crisis that is affecting the budgets of both commercial and public broadcasters. On the other hand, however, sports organisations have benefited from a struggle for platform leadership on the demand side. As well as traditional broadcasters, telecommunications companies and online video giants are often keen on sports rights to enhance the overall value of their platform. In order to deal with this converging multimedia business, an innovative ‘direct to consumer’ approach for sports organisations to manage and self-exploit broadcast rights is presented in this chapter, which could increase the value sports organisations derive from media rights and lessen their dependence on pay-TV operators.
Chapter 3 (‘The Social and Cultural Value of Sport’) explores the social and cultural character of sport. The concern is both for the value of a person participating in sport and for the value of the community and/or society taken as a whole. Benefits generated by individual engagement in sport include: achievement; escape; health; inspiration; self-esteem; self-identity; skills/competency. Benefits for the community include: community cohesion; community identity; reduced crime; shared experience; social capital. National benefits include: citizenship; national pride; international reputation. This chapter therefore focuses on the potential of sport to contribute to social inclusion, fostering and developing health-enhancing physical activity, forging identity, and bringing citizens together.
Following from the above, Chapter 4 (‘The Importance of Free-to-Air Sports Broadcasting’) discusses whether the market can be relied upon to deliver the benefits of