Compromise deal likely to open up TV rights market

The Premier League's next three-year, £1bn deal with Sky will remain largely intact despite yesterday's break-up of the broadcaster's monopoly of live match coverage. Although Sky will now pay less than the £1.02bn agreed, the shortfall due to the loss exclusivity is likely to be tens of millions of pounds at most, nowhere near the £400m that some observers have been anticipating.

The more significant effect of yesterday's announcement is that it heralds the opening-up of the rights market. The League's rights deal after next, due to start in summer 2007, is likely to see a much wider range of broadcasters involved. This is in line with the European Commission's desire for greater competition and greater choice for consumers.

More matches on more channels are likely to be available, and the possibility of clubs selling their rights individually is likely to be floated as a possibility by the EC. That is not on the agenda immediately. For now, the Premier League clubs' chairmen are celebrating what they see as a successful outcome.

The worst-case scenario was a potential legal challenge by the EC to the League's deal with Sky. This could have caused the deal to collapse entirely and may even have ended the collective bargaining stance which is of such financial importance to smaller top-flight clubs.

However, when the chairmen met yesterday in London to agree a compromise solution put to them by their chief executive, Richard Scudamore, they were happy to accept it. One insider confirmed that the shortfall in income "is not going to be too damaging". Sky have yet to reach agreement with the League over how much it will be but both parties agree it will not be substantial.

The compromise deal allows for eight live games to be shown on a terrestrial television channel, probably the BBC or ITV, each season from the summer of 2004, when the new deal comes into force. It has not yet been decided when these matches will be shown, although an EC spokeswoman, Amelia Torres, confirmed that whoever wins the rights should be able to pick fixtures featuring England's leading sides.

"These will be top-end Premiership games," she said. "I cannot go into the details for the time being but we are talking about high-quality matches that terrestrial customers would want to watch."

That may be true, but it is understood that the eight games will actually be from Sky's third-choice "copper" package of rights. The games will be shown on Saturdays at 5.15pm and are not likely to include any genuine "blockbusters" such as Manchester United, Arsenal or Chelsea against any of the others.

Sky, which will sub-tender the rights to the eight games, did not comment on the ruling, which means they no longer have exclusive live rights to the Premiership.

However, the Premier League chairmen are hopeful that there will be no major financial impact on the value of the deal already struck with the satellite broadcaster.

A statement from the Premier League, said: "We can confirm that a provisional agreement has been reached with the European Commission in order to settle their investigation into our broadcasting rights.

"This agreement meets the Commission's competition concerns and strikes a balance between the interests of fans and broadcasters while maintaining the value of our rights.

"This announcement leaves in place the new deals already negotiated for the next three years and recognises the changes the FA Premier League have made to their broadcasting arrangements over the course of nine months of negotiations.

"Crucially this agreement delivers our clubs financial stability and certainty enabling them to plan for the future.

"The agreement protects the principle of competitive joint selling which underpins the integrity of the competition and significantly for fans, maintains the quality of the game both now and in the future.

"The terms of the settlement also offer the FA Premier League the flexibility to structure its rights in line with market conditions in three years' time." The Commission was happy to have gained the concession that Sky would have to give up exclusive live rights and, after the end of the next three-year deal, the Premier League will not be able to sell their entire package to a single broadcaster.

The EC competitions commissioner, Mario Monti, said: "For the first time in the history of the Premier League, free-to-air television will have a realistic opportunity to show live Premier League matches."

The Premier League had initially hoped that their previous decision to break up their TV rights into four separate packages, with different broadcast times, would placate the Commission. However, while the BBC won the right to show the highlights packages, the fact that Sky won all four live tenders led to further problems.

Scudamore was then forced to embark on an exhausting round of meetings in Brussels amid fears of a legal challenge before the compromise solution was eventually reached.