The problem of pay-tv price wars for sports, particularly English football

• Main Author: Tan, Mabel Chai Lin
• Other Authors: Ang Peng Hwa
• Format: Theses and Dissertations
• Language: English
• Published: 2014
• Subjects: DRNTU::Humanities
• Online Access: http://hdl.handle.net/10356/61682
• Institution: Nanyang Technological University

Industry liberalization and technology advancements have heightened competition for premium content on pay-TV. The most significant, and high profile, contests for such rights are for sports programmes, most notably the English Premier League (“EPL”, or, “BPL”). Such price wars by pay-TV operators have spiralled into loss-making bids and a consequent rise in consumer costs around the world. Regulatory interventions have centred on the anti-competitive aspects of exclusivity and re-distribution measures in Europe, particularly the UK. More recently, the spiral of loss-making bids in Singapore for EPL had also prompted the country to impose the new cross-carriage rule that mandated re-distribution of exclusive content. The philosophy of the Austrian interpretive economics is adopted here, where the two-part study balances both inductive and deductive methods towards an “economics of meaning” (Chamlee-Wright, 2011). Verifications of the existing explanations through the case studies in Part 1 lent empirical support to the deductive search for the perceptions and motivations of the pay-TV operators through interviews in Part 2. Existing explanations on the value of sports’ content, and the market foreclosure opportunities they availed, were corroborated through both parts of the study. These were, however, only a subset of the larger motivation of fear and the risk of loss of the sports rights to pay-TV operators. The second motivation for the price wars stemmed from the rivalry between large, oligopolistic pay-TV players that propelled the desire to win. In turn, both motivations were harnessed through the use of closed auctions by sports rights’ owners to extract the high losses in the sustained bidding wars. Another existing economic model (Armstrong, 1999) on the effects of the terms of sale was also substantiated through the study. This suggested that the sale of sports rights on variable basis on per-subscriber or revenue share fees similar to the larger entertainment media on pay-TV would change the optimal strategy of the rights’ holders towards blanket distribution, and therefore mitigate the price wars. This policy alternative is discussed in light of the prevailing intellectual property rights’ regime embodied in the Berne Convention (1971) and TRIPs (the Agreement on Trade-Related Aspects of Intellectual Property Rights) in WTO (World Trade Organisation), and recommended as a practical recourse to counter exclusivity and the bidding wars, improve public access to sports while reinforcing competitiveness in the pay-TV industry.