Opinion of the Advocate General threatens the revenues of sports rights holders
The Advocate General delivered an Opinion yesterday in a test case on the ability of sports rights holders under EU law to limit the rights granted to satellite broadcasters to a given national territory.
If the Opinion is followed by the Court of Justice it is likely to have serious implications for rights holders.
The facts
The FA Premier League (FAPL) divides the right to broadcast live matches on a territorial basis. Under the terms of a licence, the licensee agrees to take steps to prevent its broadcast being available to view outside of its specified territory. This is done in part by encrypting the satellite signal and by ensuring that the necessary decryption equipment is not available for purchase outside of that territory. In return the FAPL covenants that it will only grant the right to broadcast live matches to one broadcaster in any given territory. This system allows FAPL to maximise revenues in territories where demand to view Premier League matches is greatest (such as the UK).
In December 2007 Karen Murphy was fined for showing FAPL matches licensed to a Greek broadcaster for broadcast in Greece using a Greek decoder card. Ms Murphy appealed to the High Court, who referred a number of questions to the Court of Justice. In answering those questions, Advocate General Kokott concluded that:
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where content is placed on the single European market by, or with the consent of, the rights holder, the rights holder cannot subsequently rely on intellectual property rights in the content to prevent the broadcast in another territory;
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as a result of the above, any agreement which restricts within the EU the sale of decryption equipment which is necessary to access the broadcast of the content, is contrary to competition law. As the object of such a clause is to restrict competition, the Advocate General held that it was not necessary to consider the actual effect of the clause on competition. On the facts however, the Advocate General left open the possibility that the FAPL could rely on Article 101(3) (justified restriction based on promoting economic progress); and
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preventing a licensee in one Member State from broadcasting across the single European market is an unjustifiable restriction on the freedom to provide services.
The possible consequences
If the Court of Justice follows the Opinion of the Advocate General (which is usually does although it is not obliged to do so), it will not be permissible under EU law for sports rights holders to prevent licensees from broadcasting content outside of their licensed territory and across Europe. This in turn would prevent rights holders from being able to offer licensees exclusivity in a territory, which may lead to a reduction in revenues generated by the rights holder in exploiting its content.
While it remains to be seen whether the Court of Justice will follow the Advocate General's Opinion, it is clear that the potential consequences for rights holders and the manner in which they market their content in particular, could be far reaching.
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