On Tuesday there were two examples of the discomfort that the British Establishment feelsabout the growth of the idea that people should pay over and above the licence fee to watch favourite TV programmes: the government defeat in the House of Lords, when peers voted to keep eight great sporting events on terrestrial television; and the OFT's investigation of the dealings of football's Premier League with the BBC and BSkyB.
Before leaping up on the side of the Lords and the OFT, just consider this: we have, by popular acclaim, the best television in the world. It comes either for free, financed by advertising, or paid for by a poll tax, the licence fee. Yet more and more Britons are choosing to pay large fees for something more, by signing up to cable or satellite. Clearly people want something that is not supplied by the four terrestrial channels.
The thing to understand about television is that the period we regard as normal -between the 1950s and about 1990 - is abnormal by the standards of most commercial activities. Normally any product for which there is rapidly growing demand attracts many producers, each attempting to make the better mousetrap. Competition sifts the weakest out and the producers settle down to a relatively small and stable number. Every now and again a newcomer seeks to break in, sometimes succeeding, sometimes failing, until another product comes along and people's desire for the old one fades. Think of cars; think of computers.
In television, this processnever happened. Instead, not just here but everywhere in the world, the limits of the transmission spectrum meant that television had to be rationed, either by the government giving itself a monopoly or by regulating commercial producers. In Britain we had both.
Now, of course, that is changing. Change has already been brought about by cable and satellite, but soon, and much more radically, it will come from other technical advances. The most important of these is probably the switch to digital TV, which, aside from improving picture quality, will make possible a large expansion of terrestrial and satellite services.
The result is that the Darwinian process which allowsbuyers to choose the best producers is happening after the industry has evolved into a mature shape. It is not just a question of there being hundreds, maybe thousands of channels. It is perfectly possible that there will not be any channels at all, as people select what they want to view when they want to view it.
Sport has two particular characteristics that make it very interesting to the evolving television industry. The first is that it is one of the few things that reasonably affluent men will watch. The great problem of television, from an advertiser's point of view, is that the most attractive people - rich, youngish men - watch the least television. (I use the word attractive, of course, in a purely financial sense.) Those who watch the most TV - children, the unemployed, part-time workers and the elderly - have the least spending power. There are some of us who hate sport and will only watch Blind Date but statistically, it seems, we are insignificant.
The other characteristic of sport is that much of its value lies in immediacy. The value of a football game delivered in real time is much, much greater than its value even half an hour later. Sport is therefore different from virtually all other television products: you would not mind watching a film or a documentary (or even Blind Date) a few hours after other people, but sport has to be now. Whatever happens to television technology, this characteristic will remain.
Sport is therefore the ideal medium for a TV company seeking to expand its reach, or even insure its position against new and technologically different competition. Thus top- quality sport is vastly more valuable now than it has ever been before, or than the sports industry ever appreciated.
But the sport has to be top- quality. Fred Hirsch, a brilliant economic journalist who died tragically young, identified what he called "positional goods", things that had much of their value in their rarity. As companies became more efficient, the real price of most things would come down, or at least their quality would improve. But there would be a group of things whose production could not be increased - a famous painting, a box at Covent Garden, a Queen Anne house. As people became richer, they would bid up the price of these, competing for their scarcity, so that in relative as well as absolute terms the prices would rise.
A number of sporting events come into this category. There is only one Wimbledon, one FA Cup Final, one Derby. However much you increase the production of tennis, football or horse racing, you do not create more of these events. So their relative value becomes ever greater.
To whom should this additional value accrue? Who owns it? The Lawn Tennis Association is producing the same product that it was 20 years ago, and the players are playing as many games. But the value of their output is much larger.
David Ricardo, the economist, pointed out that if the price of corn went up, the farmer's income went up and the value of the land on which the corn was produced rose, even though the farmer was doing no more work. Who should get that excess value? Should it go to the farmer, or did it really belong to society as a whole?
Should the sudden rise in the value of top sporting events belong to the performers and producers, or to society? And to what extent can performers band together (under the banner of the Football Association, for example) and negotiate as a cartel? If you believe the performers should benefit, then there is nothing wrong with making viewers pay to watch things on TV. It is then a separate issue whether they should operate a cartel or not - one could imagine an Eric Cantona negotiating on his own behalf rather in the way that film stars negotiate each movie.
If on the other hand you believe that the increased value belongs, in part at least, to society as a whole, giving viewers of the "free" TV channels a first shot at the big sporting events is one rather crude way of sharing the value among everyone.
Or rather, among those youngish, richish males who watch sport. This may be a television, sport and economic issue, but it is also a gender one. I suspect that most men would argue that big sporting events were a national good belonging in part at least to society as a whole; and I suspect most women would argue that there were lots of things more important to society than, say, the Derby. But then the Lords are indeed mostly lords, not ladies.Reuse content