Saturday 23 June 2018

Could consumers gain from a sports rights cartel?

Groups including Rupert Murdoch's Twenty-First Century Fox were raided on Tuesday in a probe into the distribution of media rights for sports broadcasting. Stock image
Groups including Rupert Murdoch's Twenty-First Century Fox were raided on Tuesday in a probe into the distribution of media rights for sports broadcasting. Stock image

Liam Proud

European Union competition investigators may have found a rare example of a cartel that helps consumers.

Groups including Rupert Murdoch's Twenty-First Century Fox were raided on Tuesday in a probe into the distribution of media rights for sports broadcasting. If collusion held down inflated rights prices, the main beneficiaries from its end would be already-loaded teams and athletes.

An EU Commission statement - released late on Tuesday after the 'Telegraph' newspaper reported the raid on one of Fox's London offices - gives scant detail about the investigation.

It is looking into companies in several European states "active in the distribution of media rights" for sports broadcasts, which it suspects of violating European Union rules prohibiting cartels and restrictive business practices.

The 'Financial Times' reported on Wednesday that Ziggo Sport, owned by a Vodafone and Liberty Global joint venture, is also included in the probe.

The attention is a bad look for Fox, as it seeks to buy Sky but is likely to take too long to have much of an impact on the bid.

The Commission's probe raises questions about who the beneficiaries of a sports-rights cartel would be.

In sports like soccer and tennis, tournament administrators aim to maximise the value of broadcast rights. If the Commission is probing broadcasters, which buy the rights, then the effect of any anticompetitive practices would presumably be to reduce the price paid to sports leagues and tournament owners.

Those payments are ultimately shouldered by customers of the pay-TV groups, higher broadcast-rights prices would arguably be bad for consumers.

The Commission focus may lie elsewhere - in the murky chain of specialist companies handling and distributing media rights for sports. But if the intention of the probe is to boost competitive tensions among bidders, it may have stumbled upon a cartel featuring few victims with which to sympathise.

(Reuters)

Reuters

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