Most public service broadcasters started to cover major sports events soon after World War II. In contrast to the United States, where public service television occupies a rather marginal position in the market, state-funded television played a foundational
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role in sports broadcasting in Europe (Hoehn and Lancefield, 2003). Public service broadcasters pioneered the live coverage of major sports events and thus the mediatised promotion of sports. In so doing, one could argue that public service broadcasters have created the sports broadcasting market prior to the appearance of commercial television, which paved the way for pay television. Rowe (2004) regards this pioneering role as a form of market research development. Public broadcasting accepted the risk and built up a business that was exploited, first, by commercial free- to-air channels, and later by subscription-based platforms. With the liberalisation of the audio-visual markets in Europe, private television companies were eager to acquire live sports rights and outbid public broadcasters in many countries. Despite uneven levels of profitability, live sports coverage created ‘spill-over’ effects in terms of network branding, prestige and a stronger position to negotiate advertising rates across year- round programming (Rowe, 1999).
Fear that more wealthy commercial channels would outbid public broadcasters, and deprive viewers of events they expected to see on ‘national’ service saw the BBC propose a listed events policy in order to avoid ‘bidding wars’ and to protect the ‘crown jewels’. In 1954, the UK government listed events of national interest, which neither the BBC nor the commercial channels could broadcast on an exclusive basis. The regulation remained largely unchanged for many years, when the prospect of cable television prompted a reassessment (Smith, 2010). During the 1990s, this listed events mechanism moved back to the centre of UK television policy. The commercial strategy of the new wealthy satellite pay-television provider, BSkyB, was based on the exclusive acquisition of premium sports rights. By programming live sports, BSkyB successfully broke into this burgeoning market and built up a substantial subscriber base. Similar strategies were applied by other leading pay-television companies Canal+ and Mediaset. Following the migration of live sports coverage from free-to-air to subscription-based platforms, a harmonised listed events regulation was introduced at the European level (Evens and Lefever, 2011). To guarantee that the public would have access to events of ‘major importance for society’, the list of major events mechanism, as part of the Television Without Frontiers Directive, was introduced in 1997.1
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Following the above mentioned commercial strategy, multichannel and later digital television operators were keen to acquire live sports tor positioning themselves in the market and achieve a comfortable market position. Typically, most of these players transformed into vertically integrated operators, exploiting both the network infrastructure and managing subscription-based television services. In this context, live sports have become a strategic weapon in the battle for market share as the acquisition of exclusive rights secured a substantial competitive advantage over rivals. Such exclusive dealing, however, may deter efficient entry and therefore foreclose markets (Doganoglu and Wright, 2010). Hence, both national and European competition authorities keep a close eye on this widespread practice and strictly regulate this access to premium content, such as live sports. This situation partly explains the growing force of antitrust and competition policy in European sports broadcasting markets.
In the European markets, the battle for premium rights has been fought largely between cable and satellite operators. Leandros and Tsourvakas (2005) illustrate how this intense competition for premium rights has resulted in monopolistic pay-television market structures and financial crisis as pay-television operators overpaid for rights and overestimated consumer demand. Another well-known example is the collapse of the German media conglomerate Kirch Group. The group went into administration due to debts associated with a €315 million television deal to broadcast Bundesliga matches. As a result, the German government had to provide a €200 million financial guarantee fund for professional football clubs to ensure that they could continue operating after the collapse of Kirch Media in 2002. Since the mid-2000s, satellite operators began facing heavy competition from ‘convergent media’ players including cable and telephony operators. In Europe, cable companies Telenet (Belgium) and ZON (Portugal) play an important role in sports broadcasting, whereas Orange (France), BT (UK), Belgacom (Belgium), Deutsche Telekom (Germany) and Versatel/Tele2 (the Netherlands) use sports rights as part of their IPTV offerings. By attracting subscribers, these companies are able to cross-sell bundled telecommunications services and increase the average revenue per user (ARPU). In these markets, ownership of premium content rights is considered an important competitive advantage and allows operators to lock-in subscribers.
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The integration of traditional broadcast content with broadband delivery platforms creates opportunities for ‘over-the-top’ services that bypass traditional network gatekeepers and access providers. Such services refer to online platforms operated by third parties like Netflix, Hulu or YouTube that can be accessed through Internet- connected devices including PCs, tablets, set-top boxes or gaming consoles. Technological innovation could trigger off a new era for selling and exploiting sports media rights, and may pose heavy competition for the established providers of televised sports. After Google’s YouTube already streamed Indian Premier League Cricket games, and the 2008 Beijing and 2012 London Summer Olympics, both Google and Apple announced that they are ‘in talks’ with some major sports leagues including the NBA, NHL and multiple European soccer leagues such as the FA Premier League to have access to compelling content and show live games on their television services. Constant progress in information technology and the notion of ‘media convergence’ could drastically alter the economic value of sports broadcasts if delivered by multiple service platforms and consumed over different devices. To date, online and mobile rights have been considered a by-product of the traditional ‘broadcasting’ rights, but this could change in the future. If the omnipresence of the Internet in our daily lives is reproduced in the business of sports media, chances are likely that local, traditional television companies suffer global competition and lose the battle. The expected evolution to web- based and multiscreen viewing, especially amongst younger generations, might intensify the struggle for sports rights and produce a global market structure dominated by transnational conglomerates, most notably those active in technology sectors.