Court Ruling Defends Decoders, Branded Content

Michael Hedges October 6, 2011 - Follow on Twitter

Media content is special merchandise. The more exclusive, the more special it gets. It is the essence of brand value. This is not difficult to decode.

Buying and using a satellite TV decoder card of your choice was affirmed by the European Court of Justice (ECJ) (October 4) in the case brought by a UK pub owner who had exhausted all remedy under UK law. The pub owner had purchased a decoder card of Greek origin for access to football association Premiere League matches rather than access through UK pay-TV provider BSkyB, and at considerable savings. The Greek decoder card cost the pub owner about €900 and the BSkyB card about ten times more.

BSkyB, principally controlled by News Corporation, took all the steps to collect through the UK courts, winning each time. Portsmouth pub owner Karen Murphy finally took her case to the ECJ.

One of the European Union’s guiding principles is the common internal market, leveling the competitive playing field across the 27 Member States. The EU executive, the European Commission, has defended the internal market principle as it has the idea that competition is better than monopolies.

The ECJ affirmed those principles, in the face of opposing arguments from sports rights bodies, saying, the “import, sale or use of foreign decoder cards is contrary to the freedom to provide services and cannot be justified either in light of the objective of protecting intellectual property rights or by the objective of encouraging the public to attend football stadiums.” People in Europe can, indeed, buy any set-top box decoder card they like.

But pub owners, like Mrs. Murphy, and others who might reuse television content for commercial purposes must pay rights holders, in this case satellite TV providers, their due.

Television rights are bought and sold based on geography. Some markets are worth more than others. Market forces dictate the value of television content and, arguably, all other intellectual property. And exclusive, high-demand content is the most valuable of all.

Right marketers – not limited to football associations – came to the revelation that broadcasters, loosely defined, would pay dearly for rights to exclusive content. It’s a fairly simple business calculation for all parties, including consumers. In ten years the UK’s FA Premiere League has seen its income from broadcast rights rise ten-fold. A significant percentage of that revenue comes from foreign rights. The same can be said for rights to Spanish and Italian first division football.

The ECJ decision impacts that marketing plan, which is “irreconcilable” under the single internal market principle. “Payment by the television stations of a premium in order to ensure themselves absolute territorial exclusivity goes beyond what is necessary to ensure the right holders appropriate remuneration,” said the court. “Such a practice may result in artificial price differences between the partitioned national markets. Such partitioning and such an artificial price difference are irreconcilable with the fundamental aim of the treaty, which is completion of the internal market.”

Many sports rights marketers see the ruling changing the way sports rights are sold. “FIFA, UEFA and the Champions League should prepare themselves,” said Harmet Zastrow, president of Cologne sports marketing form Sport+Markt. “The big loser is the Premier League, which could have a huge problem. They could lose up to €400 million.”

The German Bundesliga (DFL) “would be able to cope,” said Zastrow to Berliner Kurier (October 4), because the DFL doesn’t receive nearly as much foreign rights income – about €25 million – as FA Premiere League.

But the single market principle is only half the story. The ECJ also dabbled into the murky zone of intellectual property rights. Those live football matches don’t have copyright protection, said the ECJ. But logos, theme music, graphics and highlights do, which allows rights holders fair compensation from reusers like Mrs. Murphy’s pub. Buying a Greek decoder card is perfectly legal under the single market principle but when the UK pub owner uses it, it’s a copyright issue.

And therein lies the rub. Content, in the broader perspective, is content. And digital, too; like ones and zeros. “If I can buy a music CD online from a company in the Netherlands and have it posted to me here in Belgium, why can’t I buy a digital download from the same company?” asked European Commission Vice President for the Digital Agenda Neelie Kroes in a speech to the Lisbon Council (October 4). “If I can watch my local team’s football matches using online pay-per-view in one member state, why not in 27? This situation does not make much sense to the man on the street. To be honest, it is not a situation that makes much sense to me. And we need to fix it.”

See also in ftm Knowledge

Intellectual Property Rights - Yours, Mine and Ours

Every content creator and user has a vested interest in intellectual property rights, the rules meant to set a course for fair distribution of art, music, video and the written word. Agreement on those rules is not absolute. This ftm Knowledge file explores what's yours, mine and ours. 42 pages PDF (March 2011)

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The Games People Watch

Media and sports are a powerful combination. Together they capture huge audiences and considerable money. This ftm Knowledge file looks at the competition from football rights battles and cycling coverage with new media to the Olympic Games. 60 pages PDF (September 2009)

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