The Premier League, the European Commission and the UK media regulator Ofcom are working towards a deal that would break BSkyB's monopoly on live broadcasting of English football's top matches.
An end to its exclusive coverage of Premier League football, starting from the 2007 season, would be seen as a major blow to Sky and its strategy to rapidly grow subscriber numbers while keeping down the numbers leaving the service every year - the "churn" rate. Football coverage is a major attraction of Sky's digital satellite platform.
The commission and Ofcom are discussing ways of structuring the rights to broadcast games with the League. Brussels and Ofcom want a deal that would force the League to guarantee a significant number of games would be screened by broadcasters other than Sky for the next three-year package, covering 2007 to 2010.
One option being considered is to break up the rights by platform, so that one package of games would be for digital satellite while others would be for terrestrial, digital terrestrial, cable and broadband. Some industry insiders believe a more likely solution would be to divide games into a large number of packages, with a rule limiting how many Sky could bid for.
Although the start of the next rights period is some way off, the parties hope to agree on the structure of the rights this summer and the League will begin the process of auctioning off the rights next year.
The commission was furious that the last award of rights, which covers 2004-07, went only to Sky, for £1.1bn, even after it insisted the League break up the rights into four packages. Sky simply bid high for each package separately. The commission says consumers should be offered a choice of broadcast services for football and that more games should be shown.
Analysts have said that with just four packages on offer last time, each containing 64 games, it was not viable for mainstream terrestrial broadcasters to bid aggressively for the rights. This was because of the cost of each package and because generalist terrestrial broadcasters, such as the BBC and ITV, are not able to show so many games each season.
One senior media source said the involvement of Ofcom now "is much more menacing for Sky" than having just the commission in the talks, adding: "It's a myth that ending Sky's monopoly would mean less money for English football. A lot of broadcasters would pay a lot of money for these rights."
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