Fair play?

When Karen Murphy took over the Red White and Blue pub in the sleepy town of Portsmouth on the southern English coast in 2004, she probably wouldn't have guessed that her new economy drive would threaten the monopoly of Europe's biggest private sports broadcaster.

But her decision to cancel the license to show live English Premier League soccer matches with British satellite broadcaster BSkyB and sign up with the Greek service Nova instead is now undermining broadcasting deals across Europe, after the European Court of Justice (ECJ) on Tuesday found in favor of Murphy, overturning a fine she received in a British court.

"National legislation which prohibits the import, sale or use of foreign decoder cards is contrary to the freedom to provide services," the Luxembourg-based court said in its long-awaited verdict. "It cannot be justified either in the light of the objective of protecting intellectual property rights or by the objective of encouraging the public to attend football stadiums."

A revolution?

Thus Karen Murphy's pub became the scene of a clash of heavyweights. The ECJ is the highest legal body in the 27-country European Union, while the English Premier League, which sold the rights to show live matches to BSkyB, is by far the richest football league in the world.

The ECJ ruled that the Premier League "cannot claim copyright in the Premier League matches themselves, as those sporting events cannot be considered to be an author's own intellectual creation and, therefore, to be 'works' for the purposes of copyright in the European Union."

Some media reports say the landlady's victory spells a "revolution" in European football, meaning that the Premier League may no longer be able to sell the broadcasting rights country by country. But while Sky's share price stumbled in the morning, it rallied in the afternoon, as financial analysts began to weigh up the implications.

"People's first reading of it was that it was bad for Sky," said Tom Singlehurst, Sky analyst at the bank Citigroup. "But the more you dig into it the more it looks sort of neutral, or if anything slightly beneficial to Sky."

"The European Union appears to have got itself into a muddle about this," Singlehurst told Deutsche Welle. "On the one hand, it seems completely logical - you should be able to buy any good or service from whatever provider is available. At the same time, that's completely inconsistent with the way content rights are sold across Europe - not just Premier League matches, but every single bit of content, films, TV etc."

More competition, or less

The confusion comes with who has the right to what content.

"The fine line the EU seems to be treading is, yes, people should be able to access sports content - i.e. the real-time transmission of the football match itself, but any intellectual content overlaid on that - a simple graphic, or even a replay of a goal - the Premier League has copyright and so can restrict its usage," Singlehurst said.

In other words, landlords presumably can show football games from any provider they want, as long as they turn the TV off every time there is an action replay.

Nevertheless, Stephan Büttner, director at the association for German landlords (DEHOGA), was cautiously optimistic. "DEHOGA welcomes this verdict," he told Deutsche Welle. "It means that private broadcasters will have to expose themselves to European competition. But now we have to assess the reasoning behind the verdict in detail, and possibly give our members advice on what they should do."

"One thing we can say already though," he added, "we hope that the decision will have a positive affect on the price structure, and will lead to moderate pay-TV fees for football broadcasters like Sky, just by the pressure of competition."

Domestic implications

The decision is of course just the beginning of a long legal road. Other European broadcasters and football leagues will now wait and see how their domestic courts implement the ruling.

Singlehurst thinks Sky probably won't lose out whatever happens. "If this ends up getting implemented in any way, it will probably involve either the Premier League only issuing commercial rights in the UK, in which case it doesn't impact Sky, or it has to sell rights on an EU-wide basis, in which case the only bidder is going to be Sky," he said. "So we could end up with even less competition in Europe."

The German Football League (DFL) said it was not surprised by Tuesday's verdict. "The DFL has studied this issue closely in the past months, and has taken precautions to limit the effects on national and international media rights as far as possible," it said in a brief initial statement on Tuesday.

But the clubs could be affected by the decision. If the ECJ ruling does force down the value on deals between the leagues and the broadcasters, German clubs, who rely on TV money for a third of their income, could lose out.

That in turn would have an effect on the distribution of wealth within domestic football leagues - it would likely lead to top clubs making exclusive deals with TV channels, boosting their own income while less internationally marketable clubs have to make do with their share of the old agreements.

'We can't sell that much beer'

Consumers and landlords presumably won't mind that very much if it means they pay less for their pay-TV subscriptions.

Büttner confirmed that many landlords have been complaining about the inflated cost of pay-TV. "I think in England it's even more expensive, but in Germany small-bar owners pay at least 2,000 euros ($2,600) a year, going up to 5,000, 6,000 or even 8,000 euros a year, depending on how big the room is," he said. "The prices have risen dramatically in the past few years, which is has angered a lot of landlords. They say, 'we can't sell that much more beer.' "

Singlehurst had sympathy with the landlord's complaints. "Sky have certainly been exploiting the potential of pay-TV," he said. "If you extrapolate the 1999 ratio of the price of beer to the cost of pay-TV to 2011, we should be paying around 24 pounds (28 euros, $37) for a pint of beer today - but then that's absolutely Sky's prerogative."

Author: Ben Knight
Editor: Nancy Isenson