Sky preparing its defences against likely Ofcom ruling

With UK pay-TV broadcaster BSkyB facing the imminent threat of regulator Ofcom forcing it to cut the price at which it sells its sport and movie channels to rivals, the companies that stand to benefit are reported to be concerned that the new rules will leave Sky with a loophole.

Specifically, The Guardian newspaper reports that rivals are concerned that Sky may simply move some of its premium sports content onto other Sky Sports channels that are not subject to price caps.

Separately, Sky is reported to be preparing a legal challenge against Ofcom’s interpretation of the 2003 Communications Act to prevent the regulator from forcing it to sell its premium channels to third parties at a regulated price. Ofcom originally investigated Sky under the Enterprise Act but decided to impose price restrictions under the Competition Act because the former only gave it the power to refer the case to the Competition Commission.

Sky is understood by the Daily Telegraph newspaper to be preparing a challenge on the grounds that Ofcom’s reliance on Section 316 of the act, which determines that licensed broadcasters should not engage in practices that Ofcom believes to be prejudicial to fair and effective competition, is based on a misinterpretation of its scope for action under the act.