Landlady 1, Sky Sports 0 – the legal victory that has Murdoch worried

A determined landlady has won a significant breakthrough in a legal battle that could transform the British pub trade by allowing premises to show Premier League games that are being broadcast by foreign networks.

Karen Murphy, who runs the Red, White and Blue pub in Portsmouth, is fighting a criminal and civil action brought against her after she began screening matches from the Greek broadcaster Nova, using a much cheaper decoder.

Yesterday, in a landmark case called "Murphy's Law", Julie Kokott, Advocate General at the European Court of Justice in Luxembourg, found that she had the right to show the matches, advising the EU's highest court to rule in favour of renegade landlords. The advice could cause a revolution in the way media sports rights are sold across the continent, and is sure to be the target of furious lobbying by the Premier League and by Rupert Murdoch's BSkyB ahead of a final decision this year.

Ms Murphy is in a bitter legal dispute with the Premier League which has lucrative exclusive deals, primarily with BSkyB but also with ESPN. For four years she has been fighting to overturn a criminal conviction for breach of the Premier League's copyright. She was fined £8,000 but has taken the case to the High Court on appeal.

Legal experts said the finding could create serious problems for BSkyB, which Mr Murdoch's News Corp is seeking to buy outright, and the funding of Premier League clubs. Robert Vidal, head of EU, competition and trade at lawyers Taylor Wessing LLP, said: "[Mr] Murdoch has always been a cheerleader for the free market; however, on this occasion I doubt he will welcome the introduction of cross-border competition and the resulting drop in turnover and margins as Sky customers migrate to cheaper providers."

The investment bank Jefferies believes that BSkyB makes about £200m a year from selling subscriptions to British pubs and other commercial premises. Paul Charity, editor of the Morning Advertiser, the magazine for the pub trade, said: "Anything that would mean licencees pay less would be welcome. The opinion has come as a bit of a shock to the pub trade because they thought that the copyright case was clearly in favour of Sky."

Ms Murphy's lawyer, Paul Dixon, said: "For the independent [pub] trade this gives them freedom to go out and buy television systems from broadcasters from any EU member state."

The publican must now wait three months for a formal judgment from the court made by a panel of 13 judges. Mr Dixon said he was confident of success after the Advocate General's finding. "It's an opinion that matters because more often than not the court will follow the Advocate General's opinion." The Advocate-General's "opinion" is not legally binding, but the full panel of EU judges follows such advice in about 80 per cent of cases. That ruling will then be passed to the High Court in London.

The case was referred to Luxembourg by the High Court because of a perceived lack of clarity in the European law. It was heard at the European Court of Justice on 5 October and the Spanish and Italian governments were among those who made representations in support of the Premier League's position. The UK government argues that the Premier League's right to license its broadcast rights for a fee in each member state is "part of the essential function of its copyright".

Ms Murphy's stance is being backed by the EFTA Surveillance Authority, which monitors compliance within the European Economic Area. The authority argues that a licensing agreement that prevents decoder cards being used outside a licensed territory "has as its object the prevention, restriction or distortion of competition".

The Tory MEP Emma McClarkin said that if the Premier League lost the case it would have "significant and detrimental" effects on the funding of grassroots sport in the UK. "This opinion is far more complicated than a simple David versus Goliath battle: money generated from television rights to sports are funnelled back into grass roots development, particularly in cricket and rugby. These are national football leagues that are being broadcast, and they should be subjected to national territorial rights agreements."

In the red, white and blue corner...

Karen Murphy

This owner of a street-corner Victorian pub a short walk from Portsmouth's Fratton Park ground has been compared to Jean-Marc Bosman, the Belgian player whose legal challenge changed the way the football transfer market operates across Europe.

The publican at the Red, White & Blue doesn't see herself as a revolutionary, so much as a traditionalist.

"Supporters don't want a match on a Tuesday night – which suits the broadcaster – they want a match on a Saturday afternoon," she has said.

"The whole thing has got way out of control. It's pure greed."

Outraged that pubs were being charged £1,000 a month to show matches, Ms Murphy followed advice from her brewery and cut a deal to take matches with the Greek broadcaster Nova.

Found guilty of breaching copyright in January 2007, she has refused to accept she has done anything wrong and is convinced she will win her case.

Ms Murphy, 46, compares the right to take games from different broadcasters to the right to buy a car from a selection of dealers. She has been a publican for nearly seven years and is known for visiting her regulars in hospital and staging fund-raising events to help people in the surrounding area of Southsea.

Sky in numbers

£1.6bn The amount the Premier League will make from its current three-year Sky deal.

£1bn Value of the Premier League's TV rights deals outside the UK over the same period.

£70m Sky revenues at risk should commercial subscribers switch to cheaper foreign deals.

£200m Amount BSkyB makes each year from selling subscriptions to pubs and other commercial organisations.

44,000 Number of commercial subscribers who have signed up to BSkyB packages.