BSkyB makes case against Ofcom pricing regulation

UK pay TV operator BSkyB is this week making the case under its appeal to the Competition Appeal Tribunal to prevent Ofcom from forcing it to set prices for its top sports channels at below what it believes to be the market rate.

Ofcom concluded last year that Sky was using its market power to set wholesale prices paid by rivals including Virgin Media and BT too high and ruled that the price should be regulated. Sky announced its decision to appeal, and struck a deal with Virgin Media and BT whereby the difference between the Ofcom-mandated price and that demanded by Sky was put into a special account in the interim.

Sky is appealing against Ofcom’s use of section 316 of the Communications Act, which holds that broadcast licence holders should not engage in practices that Ofcom considers to be prejudicial to competition. Sky argues that Ofcom resorted to this section because it did not have a case against it under normal competition law.

Concurrently with Sky’s appeal, Virgin Media and BT are making a counter-appeal, arguing that the wholesale prices for the channels were calculated incorrectly when Ofcom made its intervention, and that the prices charged by Sky should be lower.

Meanwhile, the English Premier League is reportedly set to pay out record sums from TV rights to clubs, with clubs at the bottom of the league guaranteed at least £37 million (€42 million). Extra money from overseas rights is being distributed to clubs on an equal basis to prevent too big a disparity between clubs at the top and bottom of the league.