The David Elstein Interview: Part 4 - Sky
Elstein, 60, is currently chairman of Sparrowhawk Media, owners of the Hallmark channel. Previously he launched Channel 5, worked for Sky as head of programming and held position as a senior editor at the BBC.
Today he talks about the battle for the Premier League TV rights and discusses whether Sky should be split up.
Alan Jay: Do you think that Sky should be allowed to keep the monopoly of the Premiership?
David Elstein: But it's not going to. It's not Sky's decision.
Alan Jay: Do you think the EU’s competition people should be messing around with it?
David Elstein: I think it's highly inappropriate to try and achieve effect in the broadcast market by imposing yourself on the sports market. You know, the Premier League has no obligation to television consumers and I think it's quite wrong with the European competition authorities to treat it as if it does have such obligations. The Premier League has obligations to its own members, to the football industry, maybe to sports as a whole. It doesn't have any obligation to the television industry. The television industry has historically treated football extremely badly and there's no reason why the Premier League should take less money in order to improve the fortunes of some other television operator. It's had a very successful relationship with Sky. Now clearly in its own interest, it needs to think about whether [it should have] all its eggs in the Sky basket indefinitely. I suspect that even without the pressure from the EU, be it legitimate or not, they would have to spread the rights around. The Premier League would argue that it already does do this.
Alan Jay: It certainly already tries..
David Elstein: Yes, well, they would say that with things like the pay-per-view packages, the mobile phone packages, they're already dividing up their rights. The issue that focuses everyones attention is the main contract which is the 138 matches or thereabouts which were made available for live broadcast on a subscription or free-to-air basis. Now, is that so different from live broadcast on a pay-per-view basis? I don't think so. So, quite what the competition authorities have been on about, I don't know. But they've been heavily lobbied [by] NTL, which is entirely legitimate in pushing its own point of view. And Sky is more than capable of looking after itself. It doesn't need any help from me. They successfully fought off the attempt by the OFT to break up 8 years ago - the OFT's attempt to rule the Sky contract illegal collapsed in complete failure. The restricted trades practices court threw out the case almost completely and with some derision. So I'm not sure the competition authorities would have got very far if they'd have pushed this. If you look at the outcome in France, there is a single broadcasting of the main contract. Where's Brussels there?
So all of this political gesturing doesn't get very far, particularly when the British government was always going to say to Brussels, 'keep out'. Now they did it quite quietly this time and managed to squeeze some concessions out of the Premier League in terms of additional funding for grass roots as the price of doing it. But the truth of the matter is that we have seen football being damaged by ill-judged attempts to introduce competition into the pay TV market. The ITV digital adventure and ITV Sport proved to be very expensive mistakes, not just for the channels within those companies, but for the football industry. Politicians are very wary of allowing nominal competition issues to disrupt a key sport.
Alan Jay: Do you think with Sky's impending movement to broadband and probably telecommunications there is a case for splitting it into a content company and a delivery company?
David Elstein: What you've got to have is evidence of abuse. The Cable Companies have spent many a decade trying to demonstrate that Sky has abused a dominate position in leveraging its control over certain types of content to impose itself on the distribution marketplace. They've made very very modest progress on that and the OFT kind of did an about-turn two years ago to everyone's dismay, having announced that it was minded to intervene but then decided it was minded not to intervene. Of course all kinds of people who want to advantage themselves and disadvantage Sky would come up with models that say there should be a platform company and a content company and they shouldn't be allowed to be run together. They are just as compelling arguments the other way: if you're running content, you won't have an alliance with if not ownership by, a key platform company. This is the argument that Telewest been mounting for years - it is better for Flextech TV to be part of Telewest or indeed NTL than to be sold off and to become a pure content company. My personal view is that cable is probably much better off as pure but that's neither here nor there. The only issue that arises is, is there abuse? That's for the competition authorities to decide and a structural change would only become relevant once you've decided there's abuse. In other words, once you get into remedies you can have structural remedies, you can have behavioral remedies. So, starting from the position of 'in principle there should be structural change', can’t be right.
Tomorrow: In the final part of the interview, Elstein looks ahead to analogue switchoff.