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Media | How will Brexit affect Premier League rights?

MUCH OF THE initial analysis of the potential impact of Brexit on England’s Premier League (EPL) focused on player trading, but there are other areas of concern for the Premier League which are rooted in its dependence on the audiovisual markets of the UK and the European Union.

The sale of media rights is by far the most important single revenue source for England’s Premier League. In the next rights cycle, from 2016-17 to 2018-19, the league will earn £5.136bn (€6.163bn/$6.79bn) from UK pay-television operators Sky and BT for its domestic live rights. As reported exclusively by TV Sports Markets, sister publication of SportBusiness International, rights sales in Europe will account for about $1.63bn out of total international revenues of $5.2bn across the cycle.

Brexit could have an impact on this revenue stream for a range of reasons, including broad economic factors, such as the health of the pay-television industry to laws covering intellectual property and the regulation of anti-competitive practices.

Broadly speaking, the UK’s exit options include: joining the European Economic Area, which would allow the UK to access the single market, but mean that it would still be subject to the majority of European law; joining the European Free Trade Association, with more limited access to the single market and fewer European laws that have to be adopted; or striking a bespoke trade deal with the EU, with all aspects of trade and access up for negotiation.

Until exit negotiations have been completed, there will be few definitive answers, but the outcome of the talks will shape the market for all major UK-based sports rights-holders and other content producers.

SportBusiness International put questions on some of the regulatory issues thrown up by the Brexit vote to two leading competition lawyers, John Enser of Olswang and Angelique Bret of Pinsent and Masons.

The way in which the Premier League sells its domestic and European media rights was shaped by an investigation by the European Commission in 2001. Post-Brexit, would the league have greater freedom to decide how it sells its rights?

JE: This depends somewhat on where the Brexit negotiations end up. The closer the access the UK retains to the single market, the more likely it is that the UK will at least de facto enforce competition rules close to those of the EU. With a Norway-style EEA membership, we will be bound by the same rules to all practical intents, but with a World Trade Organisation solution we will have a lot more freedom. Even if we have total freedom, the UK Competition Act rules are likely to stay in force and these are based on [EU Treaty] Articles 101 and 102. So while the UK’s Competition and Markets Authority could move away from the EU rules, it seems unlikely.

AB: Ofcom [UK communications regulator] is currently looking at the way the FAPL packages are sold and we don’t know the outcome of this review. If we do vote to leave the EU, it is possible that Ofcom may be more inclined to take a formal decision which ensures that the EPL continues to sell the rights in the manner agreed with the European Commission (e.g. no single buyer).

What is certain is that EU competition law will continue to apply to businesses whose activities have an effect on trade between EU Member States. The European Commission will, post- Brexit, continue to be able to take decisions in relation to UK companies and sporting bodies, clubs etc. The UK competition authorities would apply the UK competition law rules in parallel. This, in theory, means the risk of parallel investigations and fines being imposed both at EU and UK level, with the potential for conflicting outcomes. However, as UK competition law is based on EU competition law and has been interpreted consistently for many years in the sports sector, the application of the rules will continue to be very similar (if not identical), although this may change over time.

So the vote to leave Europe is unlikely to have a significant impact on the way in which EPL broadcast rights will be sold, nor on the value of the rights. But if Brexit means that it will be more difficult or more expensive to employ European players in the EPL, this potentially could have a negative impact on the quality of the football played and the EPL’s perceived glamour and, as a consequence, a negative impact on the value of the broadcast rights.

The Premier League is unique among the top football leagues in limiting the number of live games it broadcasts in its domestic market. Attempts by regulators to force the league to make live rights to all of its matches available have always foundered on the clearance which Brussels gave Uefa for its Blocked Hours rule. Could the league continue to cite this as a justification for restricting output?

JE: Again, this depends on the outcome of negotiations, but even if we end up at the least single market end of the spectrum, the UK legislature and regulators are going to have too much else to do in terms of creating new rules to do anything other than to ‘grandfather’ existing approvals, like that given to the Blocked Hours rule. So the EPL will probably start with a bias towards the status quo.

AB: Ofcom may increase the number of matches made available for broadcast in the UK, as they appear concerned that output is limited at the moment.

Will the UK’s loss of influence on European policy have any negative implications for the league and other rights-holders?

JE: In order to retain the benefits of free trade with the EU, it is likely that, in negotiating the ‘divorce’, the UK will need to agree that it will continue to recognise the European copyright acquis [accumulated legislation] to a greater or lesser extent. However, as a non-Member State, the UK government will have little or no influence on how EU copyright law will evolve. This is, of course, particularly sensitive given not only the proposed Portability Regulation [governing crossborder access to online media content], but also the longer-term commission agenda/aspiration towards cross-border licensing.

The Audiovisual Media Services Directive guarantees to service providers freedom of reception throughout the EU, in return for a common framework which ensures that all media and broadcast services are regulated under the laws of the nation where the service provider is based and subject to minimum EU-wide standards. That Directive is currently under review.

Following the Brexit vote, the UK government has probably already lost any ability to influence how the revisions take shape, so even if the divorce negotiations allow for the continuing benefit/burden of AVMS to apply, we might find a less industry-friendly Directive than if the UK had retained a strong voice at the table.

AB: The UK and the EPL will no longer have a seat at the table when relevant future laws impacting on the EPL’s business are drafted and put into effect. It is possible that the UK and EPL will still have a lobbying voice, but it is also possible that the Brussels community will be less sympathetic to the EPL’s views. This is of particular relevance currently, as the Commission are introducing a ‘Digital Single Market’, which will likely impact for some time on the way in which the EPL can distribute internet rights to its matches in Europe.

How will intellectual property rights, like copyright, be affected once the UK has left the EU?

JE: While copyright law largely operates on a national basis, it does so within an international framework. This includes conventions administered by World Intellectual Property Organisation, such as the Berne Convention, as well as the Agreement on Trade-Related Aspects of Intellectual Property Rights provisions of the WTO treaty and, in the EU, within a series of harmonising measures and in European Court of Justice case-law. In the short term, nothing in UK copyright law need change, nor will this likely be a priority for an administration dealing with the necessary fall-out from Brexit.

The one possible exception is the proposed Portability Regulation. A Regulation has direct effect and does not need UK law to be altered to take effect.

When the UK leaves the EU, at a stroke the Regulation then ceases to have effect, so UK consumers will lose the benefit of the proposed rules which would allow them to access their online video services while elsewhere in the EU (and consumers from other EU Member States will lose the same benefit while in the UK).

Rights-holders would need to prepare for an impending Brexit by reviewing any licensing arrangements and other IP contracts which cover the EU as a defined territory, or which concern community-wide IP rights, to ascertain whether they apply in the UK post-Brexit.

Further, a divergence between UK and EU law and case law may make it more difficult for rights-holders to manage cross-border transactions and plan enforcement strategies within the ‘old’ European Union.

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