April 11, 2018 / 12:09 PM / 15 days ago

Breakingviews - Busting EU sport cartel lines already fat pockets

LONDON (Reuters Breakingviews) - European antitrust investigators may have found a rare example of a cartel that helps consumers. Groups including Rupert Murdoch’s Twenty-First Century Fox were raided on Tuesday in a probe into the distribution of media rights for sports broadcasting. If collusion held down inflated rights prices, the main beneficiaries from its end would be already-loaded teams and athletes.

The 21st Century Fox logo is displayed on the side of a building in midtown Manhattan in New York, U.S., February 27, 2018

A European Commission statement – released late on Tuesday after the Telegraph newspaper reported the raid on one of Fox’s London offices – gives scant detail about the investigation. It is looking into companies in several European states “active in the distribution of media rights” for sports broadcasts, which it suspects of violating European Union rules prohibiting cartels and restrictive business practices. The FT reported on Wednesday that Ziggo Sport, owned by a Vodafone and Liberty Global joint venture that competes with Fox in the Netherlands, is also included in the probe.

The attention is a bad look for Fox, whose 11.7 billion pound bid for the 61 percent of Sky it doesn’t already own is under intense regulatory scrutiny. But the investigation is likely to take too long to have much of an impact on the review, which is anyway focused on Murdoch’s control over UK news. Shareholders in the British broadcaster would still probably take Murdoch’s money if he beat a possible bid from rival cable group Comcast.

The commission’s probe instead raises questions about who the beneficiaries of a sports-rights cartel would be. In sports like soccer and tennis, tournament administrators aim to maximise the value of broadcast rights, sometimes using blind auctions to increase their income and therefore the amount of prize money they can offer teams and athletes. If the commission is probing broadcasters like Fox, which buy the rights, then the effect of any anticompetitive practices would presumably be to reduce the price paid to sports leagues and tournament owners. Since those payments are ultimately shouldered by customers of the pay-TV groups, higher broadcast-rights prices would arguably be bad for consumers.

The commission’s focus may lie elsewhere – in the murky chain of specialist companies handling and distributing media rights for sports. But if the intention of the probe is to boost competitive tensions among bidders, it may have stumbled upon a cartel featuring few victims with which to sympathise.

Breakingviews

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