Sky to appeal Ofcom ruling as BT expresses disappointment

UK media regulator Ofcom has, as expected, ruled that pay-TV operator BSkyB must reduce the wholesale price of its two main premium sports channels by 23.4%, from £13.88 (€15.63) to £10.63 per subscriber per month.

BSkyB, which has been give six months to make a new standard offer to third-party providers, has said it will appeal against the ruling to the Competition Appeal Tribunal. “There should be no doubt that Ofcom’s actions represent an unprecedented and unwarranted intervention,” the operator said. “This is a marketplace where customers are well served with high levels of choice and innovation. Consumers will not benefit if regulators blunt incentives to invest and take risks. After three years of engagement with Ofcom, we now look forward to a judicial process which will apply impartial analysis and clear legal standards.”

Rival pay-TV provider BT, however, described Ofcom’s measures as “disappointing”. While accepting that the ruling was a step in the right direction, BT Retail CEO Gavin Patterson said, “Ofcom should have gone much further than it did. They have dropped movie channels, which should have been included. They should have included all Sky Sports channels, not just two. The wholesale price for the two sports channels is higher than the regulator had previously suggested. Pubs and clubs should also have been offered some help as they have no option but to pay sky high prices. Ofcom has not set a regulated price for HD channels.”
BT called for the ruling to be implemented without delay, irrespective of whether Sky launched an appeal.

Ofcom, which estimates that the move could result in between 1.5 and two million additional consumers of premium TV channels by 2015, has also said that it will take additional measures if Sky attempts to evade the restrictions by moving content to other channels. The regulator believes that consumers will benefit from the availability of smaller, lower-priced TV packages including Sky Sports 1 and 2.

On premium movie channels, Ofcom simply said that it was consulting on its proposed decision to ask the Competition Commission to look at concerns about the sale and distribution of subscription video-on-demand rights, which it said could not be fully addressed under its own powers.

The new price restrictions do not apply to HD versions of the sports channels, although Ofcom has said that Sky must wholesale these on a fair, reasonable and non-discriminatory basis.

Ofcom also gave conditional approval for Sky and Arqiva to launch the previously-proposed Picnic pay-TV offer on digital-terrestrial, conditional on Sky accepting its ruling on sports rights.