Milibandism and the TV football market

Sky‘s dominance over televised football was recently shattered by the entry of British Telecom into the market. On the face of it, this competition should be exactly what our country needs, to bring down the outrageous expense of TV, as a small but significant strike against our cost of living crisis. However, the market for football rights is dysfunctional, and Sky may already be trying to undermine competitive pressures [link]. That’s why Milibandism needs to be applied.

If BT and Sky were competing for customers on equal terms and with equal products, then prices would naturally fall. The problem is that they can’t have an equal product. One or other will have the football rights and the customers will go straight to that provider. Therefore, the two companies will compete ferociously to buy this content, pushing the price up to astonishing levels, and wiping out the advantage the consumer would have gained through their competition.

The prices paid for football serves no good purpose. The money goes to the players. We enrich a few young men, well beyond their worth, with little social benefit earned. If a future Miliband government were to step in by fixing the price at 50% of the current level, and then giving equal access to both Sky and BT, then the price of television would fall. The consumer would benefit greatly, and the only losers would be the players, even though they would continue to be multimillionaires.

This may seem an aggressive action for a Labour government to intervene in such a way, but when we look at the proposal of the current Sky boss, we are confronted by a cartel. He proposes that BT put their football on his satellite, and he will return the favour when he wins the auction by putting his football on BT’s cable. In other words, the two should compete to buy football rights, but then to share customers, rather than compete to attract them. Looked at from a Miliband perspective, I put that in the predatory category.

Even more aggressive than this is the story told by Richard Branson, who attempted to compete with Sky through his Virgin TV. With his partner NTL, they intended to quietly buy up ITV shares, in order that they have a content provider for shows that have come to include X-Factor and Downton Abbey. According to Branson’s autobiography, somehow Rupert Murdoch saw them coming and started buying ITV shares himself to thwart their plans. Eventually Murdoch won that battle and Branson withdrew. Sky continues to dominate and consumers have paid a hefty price ever since.

We don’t know how Branson’s plans came to the attention of Rupert Murdoch. It may be that Murdoch is supremely intelligent, or it could be that Branson was careless with the security of his voicemail, but the point is that we need there to be competition in this market, as a matter of public interest.

If a future Labour government were to intervene to ensure that competition exists, then a fine policy it would be.

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