BT Vision and Virgin Media have expressed disappointment at Ofcom’s ruling on how BSkyB should sell Premiership football to rival platforms on a wholesale basis. They said that the ruling had not gone far enough to loosen BSkyB’s powerful hold on sport rights. It is perhaps significant that BSkyB shares closed up 3.4 per cent at 602p following the ruling.
BT Vision and Virgin Media have expressed disappointment at Ofcom’s ruling on how BSkyB should sell Premiership football to rival platforms on a wholesale basis. They said that the ruling had not gone far enough to loosen BSkyB’s powerful hold on sport rights. It is perhaps significant that BSkyB shares closed up 3.4 per cent at 602p following the ruling.
Ofcom have conducted a detailed investigation over three years, displaying a care that reflects the sensitivity of the subject. The original complaint from BT, Virgin Media, Top Up TV and the now disappeared Setanta argued that there are structural features of the pay TV market which confer on Sky unique advantages in the acquisition and distribution of premium sports. In their view Sky’s large base of pay TV subscribers together with its gatekeeper position on the satellite platform gives it significant bidding advantage and enables it to continue to acquire and retain the rights to the most attractive content.
The decision may have come too late for BT Vision and Virgin Media which had hoped to launch competing channels before the start of the 2010-11 football season. Before they could do so, BSkyB’s appeal for a stay of the Ofcom ruling will have to be heard by the Competition Appeals Tribunal. However, the legal test for a stay of Ofcom’s decision entails a high hurdle, e.g., Sky would have to show that in the absence of a stay, Ofcom’s remedy will cause Sky to suffer ‘serious and irreparable harm’ during the course of an appeal. Ofcom gave BSkyB six weeks to comply with the decision. Any application for a stay must be made within 60 days.
Ofcom set prices for BSkyB to sell its Sky Sports 1 and 2 channels higher than market analysts had expected, at £10.63 per customer per month each, or £17.14 for the pair. This is, respectively, 23.4 per cent and 10 per cent less than BSkyB charges Virgin Media, currently its own wholesale customer. It is higher than Virgin and BT had wanted. The telecoms company is particularly disappointed with Ofcom’s decision to set a wholesale rate that is above the range of prices outlined in the regulator’s June 2009 consultation.
BSkyB has been made a tremendous fuss about the decision, backed up by the Premiership and the Rugby Football Union which has been particularly vociferous. One might ask what all the fuss is about given that the decision taken by Ofcom is rather cautious and scarcely punitive. One explanation is that it fears that this is the thin end of the wedge and that this first step will lead to a growing stream of regulation. Ofcom has been able to present BSkyB as a BBC-scale dominant operation but without the costly public service obligations.
We shall be hearing a great deal about this decision and the fight against it over the next few months and we shall provide full coverage.