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Delay likely before UK pay-TV operators offer cut-price sports

UK pay-TV operators Virgin Media and BT Vision are unlikely to take advantage of regulator Ofcom’s decision to force rival BSkyB to reduce the wholesale price of its sports channels in time for the start of the next English Premier League season.

The News Corp-owned operator will appeal to the Competition Appeal Tribunal, after Ofcom ruled that it must reduce the wholesale price of its two main premium sports channels by 23.4%, from £13.88 (€15.65) to £10.63 per subscriber per month, a move that could delay any final decision before 2011.

Investment bank Morgan Stanley noted: “It is our understanding that such an appeal would require the Competition Appeal Tribunal to conduct a further root and branch assessment of all issues from scratch, rather than assessing the evidence already gathered by Ofcom. Such an appeal could easily delay any final decision on these issues until late 2010 or early 2011,” it noted.

Meanwhile, Jeremy Darroch, Sky’s chief executive, said Ofcom’s decision was likely to hit UK sports “where it hurts”. In an official statement, he said, “I think [Ofcom’s] actions are likely to drive down the value of TV sports channels and reduce competition in the marketplace. Certainly, businesses that have so far shown little appetite to invest in sports I think will be less likely to do so if they can get access to Sky’s channels at a risk free, knock down price governed by the regulator. And I think that risk is undermining the virtuous cycle that’s been created in British sport over the last few years with sustained investment, much of it from broadcast TV rights, that’s really flowed through at all levels and has had positive effects right through sports. That’s one of the reasons why the sports governing bodies in particular I think are concerned about the decision.”

He added that he believed regulators should not set prices in free markets unless there is clear evidence of breach of law or harm to consumers. “That is manifestly not the case here,” he said. “In no other country in the world do people seek to regulate the price of TV in the way that Ofcom are proposing and I think that tells its own story.”