News has broken this morning that UK satellite broadcaster, BSkyB, has pretty much retained the rights to all UK Premiership football that shows the power of content brands over broadcasters. After a European Commission ruling about Sky's anti-competitive behaviour the Football Association, who were selling the rights for three years from 2007, the rights were broken into six packages.
The packages were then put up to bids in a two step process (are you still with me...?) and major UK broadcasters such as Sky, Virgin/NTL/Telewest, ITV and Irish sports broadcasters Setanta all put in their bids.
The reported outcome is that Sky were awarded two packages and Setanta, which is only available on Sky, got the other two. They paid - wait for this - Â£4m per game. Now this isn't the NFL, Sky only have 8 million or so subscriber homes and, allowing for viewership in pubs and clubs, I doubt if the viewership for an average match exceeds 1 million viewers. So, Sky and Setanta are paying Â£4 per viewer. I've yet to see what the plans are for the lucrative overseas distribution market, which is where Setanta specialise, or indeed for the broadband market, where both Sky and Setanta are involved.
Since Sky charge around Â£15 per subscriber to their sports channels, you can begin to see the maths adding up - I have to pay this price to watch rugby even though I have no interest whatsoever in football. So, it's a land grab which will benefit only the ludicrously inflated salaries of football players (the money goes from Sky > FA > clubs > players > luxury car dealers faster than you can count it..).
With about the same number of subscribers as Sky, IMHO, but still heavily loss making (albeit moving swiftly in the right direction), there was no way the new cabconglomerateate could justify bidding this high, and ITV clearly couldn't get the sums right to cover these costs with advertising revenues, so we all end up where we started out. Expect both these groups to get involved in the subsequent auctions for highlights, mobile and other rights.
So, at the moment Sky is chuckling all the way to the bank, but by 2010 technology like Orb and Slingbox will be commonplace and trying to prevent the live broadcasts from being redistributed for free will be very difficult. The only solution that I can think of is broadband only distribution, where DRM can be used to control piracy.
What the EC failed to do, technology might yet achieve...