Monopoly in sports broadcasting

Abstract

There is an important current policy debate about the social role of major sporting events and their availability on television in the UK. This paper draws attention to a key argument that has not been made in the debate so far. This is that sporting events and championships are natural monopolies. That is, it is not possible for new firms’ to enter the industry and supply an identical ‘product’, such as a duplicate FA (Football Association) Cup competition. In consequence, broadcasters who gain rights to these events are monopoly suppliers to their viewers. Now monopolies in general restrict supply and raise prices to levels which exploit consumers and are not socially efficient. In the case of broadcasting in the UK, the emergence of satellite television has provoked a price war for the right to monopolise sporting rights, with monopoly pricing passed off to the consumer via subscription charges. To rectify this, this paper recommends a new regulatory agency that would control the pricing activity of subscription broadcasters, and specify a list of ‘crown jewel’ events that must be available to free‐to‐air broadcasters.