Assessing the European rights judgement

Twenty four hours after the European Court of Justice seemed to turn the world of future sports rights negotiations on its head, it’s time to look behind the easy headlines and see what it actually means.

A locals’ pub 10 minute’s walk away from Portsmouth’s occasional Premiership ground, Fratton Park, the Red, White & Blue doesn’t seem like the obvious sort of place to mount a revolution. But that’s effectively what pub landlady Karen Murphy started when she installed a decoder to watch English Premier League matches beamed from a Greek service into her pub back in 2005. Back then, Sky (the UK rights holder) wanted to charge her £700/month for screening its channels in a public place (costs vary depending on the size of the premises, topping out at around £12k per year – plus no games are ever shown between 15.00 and 17.00 on Saturday in the UK in a deliberate move to stop crowd erosion at stadia throughout the land).

Murphy found that she could get the matches from Greece’s Nova for £800/year, could screen matches with a 15.00 Saturday kick-off, and, what’s more, had access to all 380 of a season’s EPL matches rather than the 138 offered live by (now) co-rights holders Sky and ESPN.

It was, to all intents and purposes, a no-brainer, so she she signed up and the EPL, protecting a rights deal worth around £3.5bn over three years, with £2.1bn from UK broadcasters and £1.4bn from overseas, promptly took her to court. Since then the case has bounced around the legal system with the European Court of Justice effectively ruling yesterday that stopping consumers from buying TV content from overseas was in breach of EU free trade laws, and thus potentially destabilising the entire model of parcelling up European sports rights between individual territories.

You can read the full judgement here but there are some important things to note.

• There’s going to be no immediate effect as the current rights deal extends until 2013
• This is not a final judgement on the case. In an increasingly complicated European legal system, that has to be made by the High Court in the UK. But national courts are rarely keen to overturn the rulings of a supra-national body.
• This is mainly a dispute affecting pubs and clubs where the price differential between services is extreme. As far as the domestic market is concerned, the price paid by Nova subscribers in Greece and Sky subscribers in the UK is fairly consistent.

Perhaps more importantly, the headlines braying that this is a victory for Murphy and her supporters are a long way wide of the mark as there was a sting in the tail of the judgement relating to copyright. Here’s the relevant paragraph:

“Finally, as regards the questions asked concerning the interpretation of the Copyright Directive, the Court notes first of all that only the opening video sequence, the Premier League anthem, pre-recorded films showing highlights of recent Premier League matches and various graphics can be regarded as ‘works’ and are therefore protected by copyright. By contrast, the matches themselves are not works enjoying such protection.”

All of which effectively means that copyright law will protect the broadcasts where competition law won’t. Dont be surprised to see an EPL bug appear somewhere on the screen, even from the ‘clean’ world feed.

So, where do we go from here? To be honest, no-one really knows as the judgement is wide enough that you could drive several lorries between the lines, and that’s even before you get to the wider implications for the entertainment industry as a whole (let’s just say that the discussions about the issue at the current Mipcom in Cannes will no doubt be rather lively). Casting an eye over the UK’s press this morning sees it variously presented as a victory for Britain’s publicans on the one hand (The Mirror) or a verdict that fell dinstictly short of a giant-killing on the other (The Independent).

“In practical terms, the Premier League will now have to decide how it wishes to re-tender its rights,” sports media lawyer Daniel Geey of Field Fisher Waterhouse solicitors told BBC News, probably providing the most succinct summation. “Be it a pan-EU tender, selling in only certain EU member states, or devising a plan to start its own channel, they will be deciding how best to maximise the value of their product to ensure any revenue shortfall is minimised.”