Stiff competition for sports events’ audio-visual rights amid piracy rise

The UN Conference on Trade and Development (UNCTAD) says the battle for audio-visual rights to sports events is as fierce as the action on the field, and competition regulators in developing countries must be prepared to play the game.

With half the globe glued to screens for the soccer world cup, the rise of mobile and streaming technologies and evolving economic models – not to mention the staggering amounts of money involved – have raised new competition issues for consumers in developing countries, UNCTAD says.

The battle for the right to broadcast events like the World Football Cup in Russia is as fierce as action on the field, with broadcasters bidding billions of dollars. Citing example, UNCTAD says fees for the World Cup have increased by more 900pc in the last twenty years. And the sale of audio-visual rights have become, at 40pc to 60pc, one of the main revenue streams for professional sports, along with sponsorships, ticket sales and merchandising.

A report of UNCTAD says, in 2017, the global sports market was expected to generate revenue of around $91 billion. The worldwide sporting events market is expected to increase at a compound annual growth rate of 3.6pc in 2017-2021.

The economic dimension of sporting events has become increasingly important and, in recent years, the sale of audiovisual rights has revolutionised the sector. The intensification of competition in the context of a stable number of major sporting events has transformed the sale of audiovisual rights into a lucrative business capable of attracting substantial revenue, says the report.

The acquisition of audiovisual rights is an enormous cost for media content providers and pay television operators and constitutes a large share of their total spending on programming. The sale and acquisition of audiovisual rights for sporting events is subject to rules on competition, notably the prohibition of anti-competitive agreements between undertakings and the abuse of dominant positions.

The tendency to broadcast important sporting events through pay-television or pay-per-view models has generated a sharp increase in piracy and illegal broadcasts.

“Professional sports like football, cricket, basketball, boxing, baseball, motor racing and Olympic events are already drawing billions of viewers in developing countries – on TVs, computers and phones,” says Teresa Moreira, who heads UNCTAD’s work on competition law and policy.

The scale of the challenge faced by sporting event broadcasters in combating piracy is shown by the fact that more than half of millennials watch illegal streams of live events.

According to one survey, 54pc of millennials have watched illegal streams of live sporting events and a third admit to regularly watching them.

The sale of audio-visual rights has also sometimes required governments to decide which events should be broadcasted on free television so that consumers could watch national and international leagues competition without having to pay.

In a paper submitted to the current session of Intergovernmental Group of Experts on Competition Law and Policy established under the UN Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practice, author Joseph Wilson, the former chairman of the Competition Commission of Pakistan and McGill University professor, says that broadcast liberalisation in Pakistan brought “new choices but also highlighted the complex interplay of rights of various actors”.

The competition issues that arise are relevant both for developed and developing countries due to the shared interest of viewers in broadcast events and the transition to digital broadcasting systems in most developing countries.