Saturday 24 March 2018

Landlady scores early but rights game is far from over

She is an unlikely hero. From her patriotically-named public house, the Red, White and Blue in Southsea, Portsmouth, publican Karen Murphy has taken on the considerable might of England's Premier League and, in the eyes of many observers, has won.

Or has she? The case boils down to whether it is legal, under EU law, to purchase and use a cheaper foreign satellite decoder card to watch Premier League matches, in preference to paying what is demanded by the rights holder in your own EU member country.

The Premier League's rights are licensed, on an exclusive territorial basis, to broadcasters in various jurisdictions. Each licence agreement contains restrictive clauses which oblige the broadcaster to both encrypt its signal and to not supply decoding devices to users outside the territory covered by the licence agreement. The mechanics of such arrangements were designed to ensure that customers in one geographic region (for example, the UK) cannot receive a broadcast from a broadcaster in another geographic region (eg Greece).

The UK rights were awarded to Sky and ESPN but some public houses (including Murphy's establishment) began to purchase foreign decoder cards issued by a Greek licensed broadcaster to show Premier League matches, and at prices significantly lower than those charged by the UK licensees.

Legal proceedings were commenced in the High Court in England by the Premier League and its licensing partners against the sellers and the users of decoder cards imported from Greece. These decoder cards were used in public houses to screen live Premier League matches, including the Saturday 3.0 matches, which no UK broadcaster is permitted to screen live. The High Court referred a number of questions on the interpretation of EU law to the EU's highest Court, the European Court of Justice, about the compatibility of the licensing arrangements with EU law.

Last week, the ECJ, delivered its long-awaited judgment. It precipitated a media circus outside the Red, White and Blue in Southsea and premature talk of both armageddon for the Premier League's licensing strategy and the dawn of the new 'Bosman' for the marketing and licensing of sports rights.

Contrary to the vast majority of media reports, it is my view that Murphy did not 'win' as reported. The ECJ did decide that a blanket prohibition on the import, sale or use of foreign decoder cards is contrary to EU rules on the freedom to provide services. Further, the ECJ decided that the Premier League's exclusive territorial licensing arrangements, which prohibit the supply of decoder cards to fans who wish to view broadcasts outside the territory for which a licence has been granted by the Premier League, infringe EU competition rules.

However, and importantly, the ECJ also decided that the use of foreign decoder cards in public houses constitutes a communication to the public of certain copyright-protected works incorporated in the broadcast (in the form of, for example, the Premier League anthem, pre-recorded footage showing highlights of recent matches and various graphics). The case now reverts to the High Court which will apply the ECJ's findings to the facts of the case.

Accordingly, at this stage, it would appear that Murphy may not show Premier League matches in her public house using a non-UK decoder card, because she would be 'communicating to the public' the copyright-protected rights which have been held to exist.

It remains to be seen how the League will respond. It would appear to have a number of options. It might seek to auction off its rights on a pan-EU basis and likely to more than one broadcaster, with perhaps only a few true media giants being in a position to bid. In such circumstances, it is quite possible that a bidding war for the pan-EU rights could push pricing above the current levels paid by the incumbent broadcasters.

It is also possible that the League might decline to sell its rights in any EU market in which cheap decoders are likely to emerge. We should not rule out a subsequent challenge to any such arrangements on the basis of EU law.

Alternatively, it might decide to start its own subscription TV channel. This could happen, as occurs in the Dutch Eredivisie, where the dedicated channel is available on every platform on a non-discriminatory basis. The Premier League already operates its own overseas channel, demonstrating that it has made inroads into the broadcasting market. It is an option with a lot of upside, but is risky.

One thing is for certain -- the decision is of fundamental relevance to any organisation which sells services and rights (including sport, music, film etc) on an exclusive territorial basis within the EU. In particular, the decision will send shockwaves through the hallowed halls of all sports rights holders, whose modus operandi has long been to seek to maximise commercial returns by licensing rights on an exclusive territorial basis.

One suspects that half-time has not even passed in this particular battle. However, irrespective of the ultimate outcome, Murphy and her patrons at the Red, White and Blue will likely discuss their battle with the broadcasting behemoth for some time to come.

Niall Collins is an EU & competition lawyer and head of the Sports Law Unit at leading Irish law-firm Mason Hayes & Curran

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