Greg Dyke On Broadcasting

The Premier League should sever its ties with Sky on TV football
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The Independent Online

What the Premier League wants is to be left alone to continue its cosy arrangement with Sky which first began 13 years ago, in which Sky currently pays £340m a year for exclusive rights to broadcast live Premier League football. The league's chief executive, Richard Scudamore, is due in Brussels tomorrow to argue that case, but unless there is a dramatic turnaround in views inside the commission, this time the league and Sky could be on the losing side.

When the last contracts were awarded, in 2003, the competition commissioner, then an Italian called Mario Monte, only agreed the deal on the basis that, first, a few live Premier League matches would be made available to the terrestrial broadcasters during the period of the new contract and, much more importantly and crucial to the current negotiations, that next time around at least one of the four packages of games has to be sold directly to a broadcaster other than Sky.

One of the last things I did as BBC director-general was, in January 2004, fly to Brussels to meet commissioner Monte and his staff. They were very pleased with the agreement they had reached with the Premier League, as it meant that Sky's monopoly would finally come to an end in 2006.

As it has turned out, all the live games have ended up on Sky during the current contract, as neither ITV nor the BBC were willing to pay the price Sky demanded for the matches, so the European Commission is even more determined to have change this time around.

The new competition commissioner, Neelie Kroes, argues that at least two of the live games packages (five instead of four are mooted this time around) available each week should go to a broadcaster other than Sky.

It's obvious why Sky wants to stand hand in hand with the Premier League as its whole business has been built around the football contract, but it's not so obvious why the league should want an umbilical cord binding it to Sky. Scudamore and the clubs clearly believe Sky has paid a premium for exclusivity in the past and that football would get less money going forward if that weren't available. While that might have been the case last time, I'm not so sure it will apply in the future, as there are now many new broadcasting platforms around, which means many more bidders for the rights.

As I've written before in this column, broadcasting Premier League matches live to Britain's pubs is now a big business. Sky gets back more than half its current outlay on the Premier League contract from selling live football to the pubs alone, so why shouldn't the Premier League sell that as a separate package.

Then there's the impact of the coming merger between NTL and Telewest to create a single cable company. The new company is almost certain to be bidding for at least one of the Premier League packages as, one suspects, will be Top-Up TV. And there's the BBC, ITV and Channel Five, although I think it's doubtful whether terrestrial stations will be able to pay enough to get any of the live matches.

And in a world where, I suspect, there are many consumers who would like to buy just the football, there are bound to be bidders who will want to do just that, buy the rights and sell them, and only them, on cable, satellite, broadband and other digital platforms.

Then there's the whole mobile phone world opening up. Currently, Sky is stopping mobile phone companies showing the goals as they happen in Premier League matches but once the Sky monopoly is gone, 3 or Vodafone would pay a small fortune for those rights, as they would drive 3G telephony.

Would watching Wayne Rooney score for Manchester United on a mobile phone only a minute after the goal really undermine Match Of The Day or Sky's recorded programming? Perhaps the biggest opportunity of all, if the competition authorities would allow it, would be for the Premier League to join up with private equity money and launch its own Premier League channel across all platforms. For this to happen, it would mean tying up the rights for at least a decade.

The digital world is exploding and the Premier League is ideally placed to exploit it, but first it has to cut that umbilical cord with Sky.

A fair increase on the licence fee

The most powerful statistic in the BBC's case for an increase in the licence fee is not what it would do with the money, but that the cost of the licence fee as a proportion of household income is less now than it was five years ago when the last agreement was drawn up.

This matters, as the environment in which the BBC is bidding for more funds is very different to the last time, in 1999. Then, the BBC's biggest competitors, ITV and Sky, were booming, but that's no longer the case.

Over the past five years, total advertising revenue has stayed flat, which has meant that ITV's revenue has gone down in real terms, while BSkyB is having to spend more and more of its income on marketing to try to counteract churn and grow its business.

While the BBC cannot expect to get its full bid, I would suspect that the licence fee increase will be somewhere around inflation plus 1 per cent which, if you look at the growth in new households each year, means a real increase of close to 2 per cent a year.

The leadership of the BBC should be happy with that.