Ofcom instigates pay TV probe

by Sarah Griffiths on 5 August 2010, 13:24

Tags: Ofcom

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Pay TV showdown

Ofcom has asked the Competition Commission to investigate the sale and distribution of premium subscription pay TV films.

The regulator said it is concerned about the way the films are sold and distributed as it "creates a situation in which Sky has the incentive and ability to distort competition."

It warned: "The end result for consumers is less choice, less innovation and higher prices."

First-run Hollywood films are particularly important to competition in the pay TV sector as a large number of consumers hanker after the latest releases via subscriptions, as close to the box office release as possible. The regulator believes the film content is a key factor for many consumers when signing up to a pay TV service.

Ofcom referred its concerns to the Competition Commission as it cannot address them fully using its own powers. The Commission has a maximum of two years to investigate. 

It has specifically referred two movie markets: the rights to films sold by the major Hollywood studios to broadcast films for the first time on pay TV and the wholesale supply of pay TV packages containing film channels, which are based on those rights.

Ofcom said its analysis has identified features within the two markets, which in combination could reduce combination.

The regulator began investigating the pay TV market in 2007 after BT, Setanta, Top UP TV and Virgin Media raised concerns about Sky's domination of major sporting events. This resulted in the ability of multiple pay TV providers to offer Sky Sports 1 and Sky Sports 2.

 

HEXUS Forums :: 4 Comments

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Posted by crossy - Thu 05 Aug 2010 14:13
The regulator began investigating the pay TV market in 2007 after BT, Setanta, Top UP TV and Virgin Media raised concerns about Sky's domination of major sporting events. This resulted in the ability of multiple pay TV providers to offer Sky Sports 1 and Sky Sports 2, which were until March 2010 offered only by Sky itself.
Sure about that last part? Because I certainly had Sky Sports 1/2 as part of my Telewest package (mainly analog cable) and then Virgin (digital) until about two years ago when I decide to save some money and get them dropped.

Bob
Posted by Funkstar - Thu 05 Aug 2010 14:15
Ofcom said its analysis has identified features within the two markets, which in combination could reduce competition.
Fixed that for you :)

How though? What is it Sky are doing that Ofcom don't like?

Why can't they run an investigation into Sky and Virgin requiring you to use their equipment instead of standards compliant hardware?
Posted by chrestomanci - Thu 05 Aug 2010 16:04
I think that most of the anti completive problems with sky stem from the fact that most of the TV channels and the broadcast platform are owned by the same company, so it is in their interests to maximise their profit to the detriment of everyone else.

While there is some ownership of both broadcasting systems and channels elsewhere in UK TV, it is no where near as extreme as on Sky. The Virgin do own some TV channels, and don't allow them on satellite, and ITV got into a fight with Sky last year and would not allow ITV HD on sky, but in general all the non sky channels are run by people who want them broadcast as widely as possible in order to maximise subscription and advertising revenue.

I think that the simple solution would be an enforced de-merger between the Sky TV channels and the Sky broadcasting platform. Lets call these new hypothetical companies Sky Channels, and British Satellite TV. Both companies would be forbidden from signing exclusive access deals.

Under this new plan, The Sky TV channels would be sold to all platforms capable of carrying them, for more or less the same price, so we could expect to see them back on Virgin media for a reasonable cost, and perhaps see a select few channels such as Sky Sports 1 on terrestrial subscription services such as top up TV, and even on internet streaming services.

Meanwhile the British Satellite TV would get more channels because the other channel providers would have no reason not to allow their stuff on the platform. We would probably also see more innovative channel packages at a better variety of price points. Finally if via media ownership rules the TV platform is not newscorp owned, we might see more subscribers as the holdouts who hate Murdoch would no longer have a reason not to subscribe.
Posted by crossy - Fri 06 Aug 2010 09:57
chrestomanci
The Virgin do own some TV channels, and don't allow them on satellite, and ITV got into a fight with Sky last year and would not allow ITV HD on sky, but in general all the non sky channels are run by people who want them broadcast as widely as possible in order to maximise subscription and advertising revenue.
Small correction: Virgin sold their channels (Bravo, Living, Virgin 1) to Sky at the beginning of June.

As to the rest of your post - couldn't agree more, that would seem like an equitable deal on the face of it. Trouble is that, like BT and OpenReach, there'd always be the suspicion that Sky Channels was giving Sky Broadcast preferential treatment.