Sky’s Darcey slams “outdated” Ofcom, says pay-TV will eclipse free

UK regulator Ofcom’s approach to regulation of the TV market is outdated and reminiscent of “1970s-style industrial planning”, according to Mike Darcey, chief operating officer of pay-TV provider BSkyB.

Addressing the IEA Future of Broadcasting conference, Darcey rounded on Ofcom’s moves to regulate the wholesale supply of premium sports channels for, as he saw it, failing to take account of changes in the marketplace and the breaking down of barriers between broadcasters, hardware manufacturers, portals and publishers. “The nature of competition has changed forever,” he said. “But Ofcom still approaches pay TV as if it exists in a bubble, not far moved on from the OFT analytical framework in 1996.  Its fixation with competition between broadcast platforms, ignoring even the now widespread bundling of pay TV with broadband and telephony, belongs more in the last decade than this one, let alone the next.”

Specifically, he said, Ofcom’s findings, which have obliged Sky to offer some of its premium services to rivals at regulated prices, showed that the regulator undervalued Sky’s channels and took for granted the risks undertaken by Sky in creating its platform. “The effect of Ofcom’s intervention is to give a leg up to those businesses with little or no interest in investing in content themselves,” said Darcey. “In Ofcom’s world, whether or not this was their intention, it seems that Sky would even be forced to supply a business seeking to use discounted sports to drive traffic to an online adult site.”

In shifting value from content creation to content distribution, he said, Ofcom would encourage the beneficiaries of regulation to make further demands. “If Ofcom’s intervention doesn’t gift the beneficiaries the results that they’re looking for, they’ll be back in search of more subsidy and more regulatory breaks.”

Darcey also made the case that pay-TV had moved beyond sports and that “the stead retreat of the terrestrials” had left space for Sky to serve audiences with a range of programming. He argued that BT’s notion that sports should be offered “in isolation” was wrong and that Sky would be able to target the remaining terrestrial-only audience with a richer pay-TV offer.