Britain to investigate Premier League soccer rights auction

* Move (NasdaqGS: MOVE - news) follows complaint from Virgin Media

* League says auction complies with competition law (Rights through with reaction)

By Paul Sandle and Kate Holton

LONDON, Nov 18 (Reuters) - Britain is investigating whether the way Premier League soccer match rights are sold is anti-competitive, alarmed by the runaway costs broadcasters have to pay to show the top games in the country's national sport.

Media regulator Ofcom's move poses a threat to the business model of the league, which bankrolls the salaries of some of the world's best players with TV revenues, and to broadcasters Sky and BT who attract subscribers with exclusive matches.

In response to a complaint from pay-TV group Virgin Media , Ofcom said it would examine whether the sale of the rights breached British or European competition law.

The intervention comes just months before the next set of rights come up for auction. The rivalry between Sky and BT could push up prices for domestic rights by 60 percent from the 3 billion pounds ($4.7 billion) they paid for a three-year deal which expires in 2016, analysts say.

Virgin offers the games to its subscribers via wholesale deals, meaning it feels the impact of higher costs.

"The fact remains that fans in the UK pay the highest prices in Europe to watch the least amount of football on TV," it said.

Analysts and lawyers said the investigation could push back the start of the auction, however the league is unlikely to put it on hold because Ofcom investigations can take years.

Ofcom said it was "mindful" of the timing and was "open to discussions with the Premier League about its plans".

WORLD'S RICHEST LEAGUE

The sale of television rights at home and overseas has made the 20-team Premier League the most lucrative domestic competition in world soccer. BSkyB and BT pay more than 6 million pounds for each match they broadcast.

Previous regulatory intervention demanded two or more firms share the rights. "But what we have seen is a very sharp raising of pricing for sports packages, so there's a sense the mechanism is not working," said analyst Toby Syfret at Enders.

The monthly cost of Sky Sports, which must be taken with a pay-TV package, has risen from 10 pounds in 2005 to 24.50 pounds following a 2.50 pound rise in September, Syfret said. BT, which has the rights to fewer games, includes a package of matches in its broadband subscriptions.

The Premier League said it sold its rights in a way that was compatible with British and EU competition law. "We will be able to demonstrate that as part of this process," it said.

Virgin argues the proportion of matches shown live on television -- at only 41 percent -- is lower than elsewhere in Europe, where leagues make all matches available to broadcasters who buy rights.

The number of games shown in Britain is constrained by an agreement not to televise matches at the traditional kick off time of 3 p.m. on Saturday to protect attendances in stadiums. (1 US dollar = 0.6384 British pound) (Reporting by Paul Sandle; Editing by Keith Weir and Jon Boyle)