Higher Viewer Subscription Charges for Broadcast of World Cup and Sports Programmes

Mr Zaqy Mohamad asked the Minister for Communications and Information (a) what are the factors behind the recent announcement by a telco to charge pay-TV viewers a significant increase in rates of $104 for the FIFA World Cup screenings in June 2014; (b) whether the continued signing of exclusive content for soccer events at high bidding prices renders the cross-carriage regime ineffective; and (c) whether the Ministry will consider reviewing its cross-carriage policy to mitigate high subscription prices of sports events

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and ensure that major sports are accessible to all, including low-income earners.

Mr Pritam Singh asked the Minister for Communications and Information with regard to the local pay-TV rates for the FIFA World Cup 2014, whether the Ministry will consider conducting a thorough review of the regulatory framework and policies that govern the broadcast of popular soccer and sporting events in Singapore so as to better protect the interests of the viewing public.

Madam, on 12 March 2014, SingNet announced that it had acquired the exclusive broadcast rights to the FIFA World Cup 2014. SingNet announced that it would sell the World Cup 2014 content as a standalone channel, at $105. Since then, they have offered an Early Bird price of $88. This Early Bird price is the same price charged by the pay-TV operators for the 2010 World Cup. That is the regular 2010 price, so this year's Early Bird price is the same as the 2010 regular price. Furthermore, for those who commit to subscribe to the Barclays Premier League (BPL) content for two years till 2016, SingNet will provide the World Cup content at no extra charge. In other words, the average price paid per subscriber for World Cup 2014 will be significantly lower than $88, once we add the subscribers who will obtain it at no additional cost.

With cross-carriage, all SCV subscribers would be able to enjoy the World Cup package through their SCV set-top boxes at the same $88 Early Bird price offered by SingNet. And this is precisely the purpose of the cross-carriage measure – to widen the distribution of exclusive content across all qualified pay-TV retailers.

Indeed, cross-carriage has been successful in reducing content fragmentation in the Singapore pay-TV market. Back in 2010, there were only seven channels available on both pay-TV platforms. Consumers had to install multiple set-top boxes from different retailers to enjoy the content they wanted. Today, there are over 60 channels available on both SingNet's and SCV's platforms. These include entertainment and sports channels, such as Celestial

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Movies, National Geographic Channel, FOX Sports and STAR Sports. Pay-TV retailers have also shifted their strategy to compete for subscribers on value-added services, like mobile apps that allow subscribers to watch TV on the go.

From this perspective, the cross-carriage policy has achieved its objectives. The policy has just been introduced and we will want to continue to review and see how it can be further fine-tuned and improved. I would like to remind Members that the intent of cross-carriage is not to regulate content prices. So, we should not judge its effectiveness in terms of whether content prices have dropped.

In fact, the acquisition and provision of top-level sports content on TV is not just left to market forces alone. The Government is committed to ensure that key sporting events, particularly those of national significance, are available to all Singaporeans, and not just on pay-TV. This is why MDA supports MediaCorp's provision of sports programming featuring Team Singapore athletes, including the Summer Olympics, the Commonwealth Games, the SEA Games, all of which through Public Service Broadcasting (PSB) funding.

MDA also puts such events on the anti-siphoning list and this was updated only last year, following a public consultation. An event on the anti-siphoning list means it must be available for Free-to-Air TV broadcasters to acquire. And I should explain that placing an event on the anti-siphoning list does not mean that the programmes will be free. It simply means that pay-TV retailers cannot acquire the content on an exclusive basis, therefore, giving the Free-to-Air broadcaster an opportunity to acquire these rights.

For the World Cup, MDA included four key matches, which are the opening, the semi-finals and the finals in the anti-siphoning list. They also included matches featuring Team Singapore, but that is not relevant in our context, so, the four key matches are the opening, the semi-finals and the finals. For the upcoming World Cup, Singapore viewers will be able to watch these matches on MediaCorp. Besides the matches on the anti-siphoning list, I also understand that the People's Association (PA) is in talks with SingNet to screen the World Cup matches for free at several Community Centres across the island.

Some Members have asked for more regulation of subscription prices for sports content. But the key is that content owners like FIFA are not obligated to sell their content at a price they do not agree with. It is not something we welcome, but on this issue, we are unfortunately a price-taker, and not a price-setter. We cannot wish away the fact that the cost of premium sports content

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has been rising globally, not just in Singapore. Broadcasters around the world are paying anywhere from 20% to 40% more for the broadcast rights to the World Cup 2014 compared with the previous edition.

Comparisons of subscription prices across different jurisdiction are also inherently fraught, as the operating circumstances in each country are different. There are wide variations in terms of the size of the pay-TV market, as well as the potential advertising and sponsorship revenue available to broadcasters.

Some have asked why MDA did not put all World Cup games on the anti-siphoning list. I think the rationale is that if you have an overly long list of World Cup matches on the anti-siphoning list, that may lead to unintended consequences. In particular, pay-TV operators will then have little incentive to acquire the matches. Instead, the cost burden will then have to be borne largely by the Free-to-Air broadcaster. Doing so would then divert a significant portion of PSB monies which are used to support a diverse range of programming covering varied interests and genres, including support for minority channels, as well as programmes that promote Singapore's culture and heritage.

In conclusion, MDA has to achieve a delicate balance. It should not be hasty to adopt populist measures that ultimately backfire, leaving consumers even worse-off.

I would, however, like to assure Members that MDA will continue to review its policies, including cross-carriage, as I have mentioned earlier, and the anti-siphoning list. Cross-carriage will be reviewed as part of a larger review of the Media Market Conduct Code later this year. As for the anti-siphoning list, the public was last consulted on this in 2012, and will also be reviewed in due course and I would encourage Members to provide feedback during the review of these policies.

Thank you, Mdm Speaker. I would like to ask one supplementary question. I note the Senior Minister of State's reply that we are a price-taker, not a price-setter. However, football is very popular among Singaporeans and there are many countries which telecast World Cup free-of-charge, such as Japan, South Korea and even neighbouring countries like Thailand, Indonesia and Cambodia. Can the Ministry look into doing more for fellow Singaporeans who do not subscribe to those paid channels?

Madam, I understand where the Member is coming from in terms of the popularity of the sport and also the concerns about pricing.

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We have to understand, as I have mentioned earlier, that, inherently, this is an issue where the rights owner, the property owner, calls the shots. And they have been doing so across all jurisdictions because broadcast payment has gone up 20% to 40% around the world, not just in Singapore. Some countries are able to offset that in a more effective way because they have bigger markets, they can get more sponsorships and more advertising revenues. So, different countries find different ways to price the content to the consumers but, across the board, the acquisition cost has gone up. All the countries are paying more to FIFA and that is, I think, how the business has evolved over the recent years, in terms of premium sports content, in particular, football.

It is something we have to review. As I have said, we are going to review our anti-siphoning list. We are going to review our cross-carriage measures as well. I am not sure that these would inherently change the dynamics of the game because these are internal measures. In the end, however we adjust, somebody has to pay FIFA this amount of money. We have to look at it in two aspects: one, understand the realities of the football market today. This is what is happening. We are, unfortunately, a small market with a high interest in football. And we may not have enough of a subscription base or an advertising revenue base to offset the cost, unlike other countries. In such a dynamic, in such negotiations, ironically, the more desperate we are to acquire, the more the rights owner on the other side will feel that they have the ability and the leverage to charge us at a high price. So, we have to understand the broader dynamics that are happening in the negotiation as well.

I would like to ask the Senior Minister of State whether he is able to share or confirm that MediaCorp has to pay to broadcast the four matches under the anti-siphoning list and how their rates compare with what SingTel pays. In the scenario where we were to include all matches under the anti-siphoning list, what is the impact of this on the pricing that MediaCorp, as a Free-to-Air station, has to pay, versus a pay-TV operator?

Madam, I think these are relevant questions that people have been asking. It is true that MediaCorp has to pay SingNet to acquire the four matches and that is only simply because FIFA does not bundle and separate out its package: four to sell to MediaCorp; the rest, to sell to SingNet. FIFA does not do that. FIFA sells the entire package to one purchaser. That purchaser can be a pay-TV operator; it can be a Free-to-Air broadcaster. It does not matter. For them, they look at the market, the purchasing power of the market. They will sell to whoever bids for it as an entire package.

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How the person who bids for it then breaks it up into the different channels and the different events, that is not something that FIFA looks at because that depends on the domestic rules: what is in the anti-siphoning list and what are the cross-carriage measures.

In this case, MediaCorp will have some ability – it already has worked out an arrangement with SingNet – to acquire the matches that are on the anti-siphoning list – the opening, the semi-finals, the finals. I will imagine that there will be some cost apportionment between SingNet and MediaCorp, and they will work out the cost. And MediaCorp, through its sponsors, through its advertising revenues, would then be able to acquire these matches.

I cannot reveal the specifics of the pricing because these are commercially-sensitive figures. But that would have been worked out between SingNet and MediaCorp.

I would also say that SingNet, based on all the revenues that it is getting from the World Cup content, actually is not able to recover the costs of acquiring the content today. So, this is not a matter of SingNet profiting or getting a handsome dividend from acquiring this package. For all the revenues that SingNet is getting from the World Cup content, it probably will not be able to cover the costs.

The question the Member also asked was: what about having all the matches put on the anti-siphoning list, having a Free-to-Air broadcaster bid; or, for that matter, as some have suggested, why not make a joint bid? But, as I have said, this does not matter from the FIFA perspective. From a property owner perspective, they look at the market, meaning the entire country, and what the country can afford. And whether it is a joint bid, a Free-to-Air broadcaster bidding or a pay-TV operator bidding, those may have a little bit of an impact on the negotiation dynamics but it will not materially change the game, which is that they will look at the overall purchasing power of the market, that is what FIFA looks at. And as I have mentioned earlier, fundamentally, that price has been going up across the board, not just in Singapore.

Three supplementary questions for the Senior Minister of State. Firstly, in view of what he has said, will MDA mandate that all contracts signed between telcos and content providers for exclusive content be wrapped up 12 months prior to the staging of the event, like in many other countries which seal the arrangements early, so telcos can offer lower charges to the viewing public in view of the lead time available to source for

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more advertising revenue to subsidise the costs of content procurement?

The second question: has the Ministry considered whether Singapore Pools, the only legal lottery operator which benefits from World Cup punting, could contribute towards subsidising the Singapore viewing public in reasonable proportion to its soccer-related betting collections and payouts?

And, finally, would the Minister clarify if the Programme Advisory Committee for English programmes (PACE) made any specific recommendation or advised MDA on measures to reduce the costs of watching the World Cup to Singapore consumers in light of the escalating costs from the 2010 experience?

Madam, on the regulations or proposed regulations that the Member asked for, to require that negotiations or the contract be wrapped up 12 months earlier, is something that MDA can look at. I would say that MDA is not opposed to looking at any form of regulation but it will always apply a cost-benefit to these regulations, meaning to say, what is the benefit of making a regulatory move and weighing that against the costs, which may include inadvertent consequences to commercial operators, and the perceptions that it will create in our pay-TV market.

In this instance, I am not familiar with the details but I would imagine that one would ask the question: if MDA were to impose such a requirement, would it end up with a situation where the pay-TV operators, or whoever submits a bid, may actually end up paying a higher price inadvertently, because you are forcing them to negotiate and wrap up within a certain time limit. I am not sure, but it is something that MDA would have to answer or look at, weighing the benefits and the costs of the regulatory measure.

Singapore Pools does contribute. I do not have the details with me but they do contribute and they do provide support through a wide range of different schemes in the sense that it is not just for MediaCorp but also for the community centre viewing. They provide some support, as I understand, to various platforms to allow Singaporeans to view the World Cup. I do not have the details of how much they provide. That is something we can take separately, but they do provide support for the World Cup viewing.

PACE – I do not have details, too, but I would imagine that they would have given feedback if it was something that mattered to them in terms of consumer pricing and the concerns that occurred even before the EPL and the World Cup

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experience the last round.

But as I said earlier, fundamentally, the challenge is not something that you can overcome because the fundamental nature of this is that the rights owner, FIFA, has a monopoly over the rights. It is a content owner who has increased in popularity around the world and they are now having the ability to charge higher prices to all markets. And in a market like Singapore, which is small, which has high demand for football, they will look at that market and say, "Well, I think you have the purchasing power to pay a high price", and they will do so accordingly. They cannot do this indefinitely because, at some point in time, if we are prepared to say, "Look, we will walk away", then they will realise that the dynamics are changing. But until then, until such time that this happens, it is very hard to change the fundamental dynamics, which is, that they will look at us as a market that can afford this rate.

It is something that we have to bear in mind when we do our review, that this is the reality of the landscape. As we do our review for cross-carriage, anti-siphoning or any other regulatory suggestions and measures that Members may have, we will have to think through how best to structure this because, ultimately, then somebody has to pay. It may not be the consumers but it may be the taxpayers, but somebody will then have to pay FIFA for the rights until the dynamics fundamentally are altered.

Thank you, Madam. I gather from the Senior Minister of State's answer that there are two factors here affecting the pricing – one would be the purchasing power of the market, Singapore's market; and, secondly, a bidding war would lead to higher pricing. So, in theory, if MediaCorp were mandated to show all matches under the anti-siphoning list, there will be no interest for SingTel or StarHub to go into a bidding war, and only MediaCorp would have interest to purchase the rights. So, would that not be something within our control that can affect the negotiations and, hence, probably, a reduction in the price that MediaCorp has to pay to FIFA?

Madam, to a large extent, I think the unhealthy dynamics of competitive bidding, causing prices to go up, have been addressed through cross-carriage, in the sense that whatever the entity that bids for it recognises and knows that that product has to be cross-carried on other platforms at the same price. So, it does not matter whichever price you pay for and whichever operator gets the rights to broadcast, if he chooses to do so on an exclusive basis, under cross-carriage, that content has to be carried at the same price on other platforms. So, that, to some extent, would already have ameliorated some of these internal bidding dynamics that the Member talked

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about.

That is why I say, even if you have a joint bid or if you have MediaCorp coming to it, yes, I acknowledge it may have some impact, it may help to reduce marginally, but I do not think it will significantly move the needle. We know from the assessment of the pay-TV operators, who have been in this game and business, that there is basically a range where FIFA is looking at in order for us to secure these rights to broadcast the World Cup; that is where they are looking at. This is the range; it is a narrow range, but you need to pay that amount of money in order to get the rights.