Dear Sports Fans: You’ll Be Paying Too Much This Summer Too | Citizen’s Emporwement Center in Israel

Dear Sports Fans: You’ll Be Paying Too Much This Summer Too

Dear Sports Fans: You’ll Be Paying Too Much This Summer Too

A government bill seeks to prevent a sharp increase in sports broadcast prices. But an investigation by the Citizens’ Empowerment Center received by Walla! Business shows that the State is having a hard time completing the legislation – and the bill has been lying on the Knesset table for two years already. In the meantime, viewers are still paying.

The Football World Cup games will be starting on June 14, and Israel is one of the countries that will be broadcasting most of the key games on an open channel, free of charge. At the same time, broadcast industry elements say that this will probably be the last time that a key sports event will be broadcast on an open public channel.

The World Cup’s broadcast rights were purchased two years ago by the Broadcast Authority, which has been dismantled in the meantime, leaving the rights to the “KAN” broadcasting corporation that was established in its stead. The Broadcast Authority had enjoyed a budget of NIS 80 million per year for purchasing and producing sports broadcasts, and therefore could afford to purchase the broadcast rights.

The transaction is expected to grant the broadcasting corporation higher ratings than any other program broadcast on the corporation’s faltering TV channel. The corporation's own sports broadcasts budgets were cut to just NIS 15 million, and it therefore will not be able to compete for the purchase of broadcast rights of high-rated sports broadcasts in the future.

For the World Cup games? (Illustration)

The Next World Cup is Liable to Cost Viewers Much More

The increasing competition for purchasing broadcast rights makes the lives of sports fans much more expensive; prices threaten to rise, as the numbers of channels and companies competing in the field of multi-channel television increase.

The next World Cup is liable to cost Israeli viewers much more, if the State doesn't manage to free a government-initiated bill. The bill’s purpose is to prevent the cost of sports broadcasts from rising sharply as a result of increased competition in the television industry.

The increasing competition for purchasing broadcast rights makes the lives of sports fans much more expensive; prices threaten to rise, as the numbers of channels and companies competing in the field of multi-channel television increase. Sports fans interested in receiving all of their broadcasts through multi-channel television platforms (Yes, HOT, Cellcom and Partner) already need to pay some NIS 200 per month, in addition to regular subscription fees.

Sports broadcasts draw large number of addicted viewers who are willing to pay a great deal of money and even to drop a television company that cannot acquire popular broadcasts, particularly in the fields of soccer and basketball. The entry of new companies, such as Partner and Yes, into the television industry forced the Ministry of Communications and the Council for Cable and Satellite Broadcasting to act to prevent competition that would push prices sky-high.

 

Viewers are willing to pay a lot. Soccer game (Photo:)

The Solution Everyone Accepts: “Sales Obligation”

The solution everyone accepts is called the “Sales Obligation”. In other words: holders of rights for popular broadcasts must sell the channels to all platforms.

The solution everyone accepts is called the “Sales Obligation”. In other words: holders of rights for popular broadcasts must sell the channels to all platforms. This method prevents competition between platforms and the price increase that could cause following the entry of additional companies to the industry. It was tried in Israel successfully when the satellite broadcast company (Yes) tried to penetrate a market controlled by the cable companies.

Yes tried to obtain the rights to popular channels that were broadcast on cable. However, the competition for purchasing the content raised the prices, threatened to collapse the industry and push up subscription prices. Only the State’s intervention and the enforcement of a sales obligation for all channels prevented that severe damage to the public.

The debate about the sales obligation was back on the agenda when Cellcom and Partner entered the multi-channel television industry. The Ministry of Communications failed to prepare for the business and technological developments in advance, and did not prepare for the possibility that new companies would seek to enter the television market. As a result, it turned out that the sales obligation and the rules of the game regarding channel purchases do not include the new companies.

A year ago, when Partner prepared to enter the television market with a bang, it began negotiating for the exclusive purchase of the Football Championship League games, at an astronomical price of NIS 50 million per year. If the transaction had been completed, every sports fan would have been forced to connect to the new company in order to see the popular games.

 

Waiting for the popular games.

The Citizens’ Empowerment Center: The Bill that Could Seal the Breach is Being Delayed

The Ministry of Communications rushed to pass a suitable bill, and to have it pass its first Knesset vote. The bill was passed on to the Economics Committee, which held a number of hearings with numerous participants, but the legislation process has yet to be finalized.

An investigation conducted recently by the Citizens’ Empowerment Center, which deals with oversight of the government’s decisions and its success in implementing resolutions, revealed that a bill designed to close the breach has been on the Knesset table for two years – a bill that would allow the State to prevent competition for broadcast rights in a manner that is detrimental to viewers.

According to the bill, the Cable and Satellite Council would be given oversight authorities to regulate the broadcasts of the new companies – in order to protect consumers. However, according to the investigation, the bill is not being advanced.
The bill was written following the work of 2 committees established by the Ministry of Communications over the course of the past decade, in an attempt to prepare for a new age of competition in the television market. The legislative recommendations were formulated following the recommendations of a committee headed by Shlomo Filber, Director General of the Ministry of Communications until last year.

The Ministry of Communications rushed to pass a suitable bill, and to have it pass its first Knesset vote. The bill was passed on to the Economics Committee, which held a number of hearings with numerous participants, but the legislation process has yet to be finalized.

Parties involved with the subject say that one of the main reasons the legislation was delayed was the Ministry of Communications’ decision to integrate the sales obligation of sports broadcasts into the legislation, which would regulate, on a comprehensive basis, the activity of the new television companies, such as Partner and Cellcom; and would enforce uniform supervision and control of all companies in the industry. The new bill is expected to be presented to the Knesset only this summer; the high likelihood of the Knesset being dispersed over the next few months and elections being called – will definitely not benefit sports fans.

The General Manager of the Citizens’ Empowerment Center, Einat Fischer-Lalo, said that “The prices of content television channels constitute a significant component of Israeli citizens’ cost of living, certainly in the case of popular content like sports, which interest such broad sections of the population. The government’s obligation to lower the cost of living cannot be manifested only in resolutions to amend legislation in order to improve matters, and it must be tasked with doing whatever it can to make sure these changes are indeed implemented, within a reasonable amount of time, and actually influence citizens’ lives.”