Sky still the Special One as battle for Premiership rights reaches the final

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Can anyone prevent a 5-1 walk-over by BSkyB in the auction for the next package of rights to broadcast Premiership football? And - Sky's nightmare scenario - will any games end up on free-to-air television?

Tomorrow broadcasters must submit their bids for the biggest prize in British television: a £1bn-plus deal for rights to screen live Premier League matches for the next three seasons.

This time Sky has some serious competitors.

The new NTL-Virgin group, a cable operator, has promised to "beat up" its satellite rival Sky and taking a significant chunk of live football would be the most obvious way of doing it.

Setanta, an ambitious Irish pay-TV broadcaster, is seen by many as the most likely to come away with any points from Sky. It could well secure one package. It is likely to bid for two.

The free-to-air broadcasters, who have been excluded from the live game since 1992, could just sneak in with a surprise strike. Channel 4 is seriously considering putting in an offer. ITV will also be tempted but its participation is less likely.

One television executive says: "The worst case scenario for Sky would be for there to be any live football, free-to-air. That could mean that subscribers who just want to see a few games give up their Sky subscriptions."

If that is a terrible outcome for Sky, it means the rights would be worth much less to the satellite broadcaster in future, so it would be a bad outcome for the Premier League too. Pay-TV, in the shape of Sky, has bankrolled British football, so many believe the League will not allow the free-to-air broadcasters into the party.

For the first time since Sky first won the Premiership rights in 1992, we know this time it cannot secure all the matches on offer. This is because the European Commission has stepped in, fearing Sky's monopoly is not good for consumers.

However, after much posturing from Brussels, all that European regulators have been able to secure is that the rights are split into six packages, labelled A to F, and no one broadcaster is allowed to own more than five. The auction this week covers the three years from the start of the 2007/08 season.

Under the Commission's deal with the Premier League, all the six packages were supposed to be equally attractive. But this has been completely ignored, with analysts saying that packages A and F clearly offer the best action.

Alan Flitcroft, an expert on sports rights with the business consultants Ernst & Young, says that, rather than helping the consumer, splitting the packages just drives up the price to the broadcaster and, therefore, ultimately to the television viewer. And it will confuse the offering, with consumers perhaps having to pay two or more different providers for their football. "This is the opposite of what the European Commission was trying to achieve," Mr Flitcroft says.

The recent prices fetched at football rights auctions across Europe show an upward trend. Sky will be extremely anxious to avoid the fate of the fellow pay-TV group Premiere in Germany. It misjudged the bidding for the First Bundesliga, losing the rights to rivals, resulting in a plunge in Premiere's share price and an immediate exodus of customers.

Sky will almost certainly employ the tactics it used at the last rights auction, when there were four packages on offer, running from 2004-07. It bid very high for each package to knock out any possible competition. This time, although it can hold only five of the six packages on offer, it can bid for all six and then hand back the least attractive one. The price Sky paid per match came down last time the packages were awarded but it will surely escalate again this time.

"My prediction would be Sky 5, Setanta 1," Mr Flitcroft says.

For Sky, the Premiership is a must-have, as a major reason why its subscribers pay more than £40 a month to take its service. This is particularly the case as the allure of its other great offering, films, seems to have diminished with the rise of DVDs. Also, Channel Four is soon to make its movies channel, FilmFour, available for free.

All the packages are made up of 23 games, but each has different schedules of kick-offs and gives its owner a certain position in the pecking order for choosing which match to screen. So package A gives its owner the first choice of the games starting at 4pm Sunday, whereas package C is the third choice of games on a Monday evening.

One television industry insider says: "The packages are not balanced in any way. Obviously anyone's first choice would be 4pm on Sunday. The whole process and structure very much favours the incumbent [Sky]."

Setanta has clearly been gearing up for a big shot at the Premiership. It already has the rights to the Scottish Premiership and it has hired a former senior executive from Sky, Trevor East.

Richard Brooke, Setanta's director of corporate development, says: "We have always expressed an interest in these rights and that remains the case."

It is thought the company will bid for two packages and, if successful, start a new channel to show the games, that will be available on Sky and cable. Analysts say that Setanta does not see itself as an aggressive rival to Sky, so, as the satellite company has to share the rights, sharing with Setanta would be the best outcome for Sky.

The big mystery is whether NTL will go for the rights in a big way. NTL is certainly a head-on competitor to Sky, as the only real rival in the pay-TV market. Newly emboldened from a deal to acquire Virgin Mobile, NTL has the greatest firepower and incentive to take on Sky. It could be a fantastic boon to driving cable subscriptions.

Announcing the Virgin transaction this month, NTL's Jim Mooney said: "We are looking at Premier League football. I think the concept of Virgin Sports is one of the most exciting things we can look forward to."

However, at an earlier stage in the process, NTL had stated that unless half the games were reserved for a broadcaster other than Sky, it was not a viable proposition. And even if it bids just to push up the price for Sky, it may well backfire on NTL. It has to buy the football content from Sky and then sell it to its cable customers - at a loss. If Sky has to pay more for the rights, it could charge NTL more.

For the free-to-air broadcasters, such as Channel 4, the calculations are equally complex. They know they cannot out-bid pay-TV groups, as the advertising they can sell for a football match cannot compete with the economics of the subscription model. So if they do bid, it will probably come as relatively modest offers.

What they are hoping for is some crumbs from the Premiership table. If Sky takes five packages, it may not be worthwhile for another pay-TV group to hold just one package. That means it would fall to a free-to-air group to mop up the least compelling package of games.

If Sky does not emerge as the big winner from this auction, it would be as big a shock as Chelsea getting relegated next season.