Uncharted Territory

April 4, 2010

BBC Muppets in Malaysia

Filed under: BBC, F1, Media, Sky, Sport — Tim Joslin @ 7:03 pm

I wonder how many other F1 fans missed the last 19 laps of this morning’s Malaysian GP? Yeap, the BBC switched coverage from BBC 1 to BBC 2 part way through the race, on lap 37 of 56, to be exact. Totally unnecessary. Apparently they needed to make way for some religious event. But they could have shown the Easter Service on BBC 2 instead of BBC 1, or, if that wasn’t acceptable, the entire race on BBC 2. In fact, I’ve just bashed off a complaint.

I’ll let you know how much of my licence fee is refunded for cutting short a race I was thoroughly enjoying ( I was watching maybe an hour behind real-time on a PVR, having paused at various stages of breakfast, so, by the time I found out the end of the race was on the other side, it was way too late).

I couldn’t help reflecting on how poor the BBC’s sports coverage can be. And how little competition there is in general in the sports broadcasting market.

A while back I had an idea as to how to sort the mess out. Maybe if I keep saying it people will take some notice.

To recap, my suggestion was to sell rights to sporting events to multiple bidders. If the highest bid is, say, £100m (for exclusivity), then the rules would allow one of the other bidders to obtain the rights for £55m, the first bidder also paying £55m (joint exclusivity). If another bidder comes in then all three would pay, say, £40m. This prevents one organisation achieving a monopoly, but, aside from that, leaves everyone better off – fans get a choice of channel (or delivery mechanism if one is an internet broadcast); the winning bidder saves some money (so can afford to buy some more content); the second and subsequent bidders get access to content they wouldn’t have obtained otherwise; the sport gets more money (£110m with two bidders, £120m with three, rather than £100m with a single bidder, in this example) and more coverage.

One problem with Ofcom’s current plan to regulate the sports broadcasting market is that it only generates competition between platforms: Sky, Virgin, BT and so on will all effectively pay the same price for Sky Sports channels.

It does nothing to encourage new, perhaps cheaper sports channels, and in my judgement makes channel competition even less likely.

Platform providers should never have been allowed to run channels in the first place. This should have been addressed when Sky first came along. Maybe Murdoch’s outrageous interference with our democratic processes has muddied the waters. A little clarity of thought would surely have led regulators to nip such a dysfunctional monopoly in the bud.

The current measure – to regulate the wholesale price for Sky Sports bundles – is not sensible, as some commentators seem to think. Immediate suspicion is always justified whenever very specific regulatory measures are proposed. If anything, this one will cement the position of Sky Sports. There are “two sides” in this, but they’re not Sky and the competition. They’re the customer and the sports themselves.

And the customer is getting screwed. Sky Sports will cost at least £20 a month (since the wholesale price is £17.14). That’s £240 a year. The BBC’s entire licence-fee is about £140. So they can’t compete, unless, as I also suggest, they charge a separate sports licence-fee (since many people watch no sport at all), once the analogue switch-off ensures that all viewers can have access to dozens of channels (which could include BBC Sports 1, 2…).

Many people will not take Sky Sports, but make do, as now, with the residual “free to air” coverage on BBC and ITV, some of it controversial because it arguably reduces the income to the sports.

If you have a monopoly, in this case Sky Sports, profit is maximised when some people can’t afford the product. That’s just how it is – 10 million paying £240 a year (£2.4 bn) brings in more money than 15 million paying £120 (only £1.8 bn). If putting the price after costs up 10% costs you less than 10% of your customers then you may as well do it.

But more people could afford to watch at least some sport if there were offerings at, say, £240 (Sky?), £120 (ESPN, ITV?) and £60 (BBC?) a year. In this scenario Sky would show (as now) a lot of sport and the BBC just the choice events. Because multiple broadcasters would show at least some events, Sky would actually be able to show even more sport for £240. And sports wouldn’t be disadvantaged if mandated to allow “free-to-air” coverage (sorry the use of the term “free-to-air” makes me laugh – ITV is free to the viewer, since ads pay the bills, but BBC coverage is not “free”, it’s just that you’re not allowed not to buy it! A situation that’s becoming increasingly bizarre).

And you’d even be able to choose which channel to watch those choice events on!

All this while the sports themselves earn even more from the rights!

Advertisements

Blog at WordPress.com.