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Sky and Ofcom reach interim agreement ahead of appeal

UK pay-TV provider BSkyB and regulator Ofcom have reached a compromise deal over the way in which Sky’s premium sports services will be wholesaled to third-parties pending the outcome of the pay-TV operator’s appeal of the case.

Sky earlier appealed for “interim relief” so that it would not have to discount its sport channels at the rate required by Ofcom while its appeal before the Competition Appeal Tribunal (CAT) is underway. Under the agreement reached with Ofcom, the latter’s “wholesale must-offer” obligation will initially apply only to the sale of Sky Sports 1 and Sky Sports 2 to BT, Top-Up TV and Virgin Media on digital-terrestrial TV and cable. Each of the three competitors will pay Sky’s full rate-card price for the two channels, but the difference between that and the relevant wholesale must-offer price will be placed in an escrow account until the appeal is concluded. At that point, the Competition Appeal Tribunal will determine how the cash in escrow will be distributed.

The compromise comes ahead of the May 14 deadline set by Ofcom for Sky to offer its channels at the new rate, enabling its rivals to prepare offers ahead of the next English Premier League season.

A Sky spokesman said: “We are pleased to have been able to put forward an agreement which provides substantial protection against the short-term impacts of Ofcom’s decision. We remain fully focused on our substantive appeal, which will be filed with the CAT in due course.”