BSkyB told by Ofcom it must cut sports channel prices

Wednesday 31st March 2010

BSkyB has been told by the regulator Ofcom it must cut the price it charges rival broadcasters to show its premium sports channels.

The decision means that the broadcaster will have to sell Sky Sports 1 and 2 at 23 per cent less than their current cost, and follows a three-year review from the regulator into the pay-TV market.

Ofcom said that Sky "exploits" its market power by "restricting the distribution of its premium channels to rival pay TV providers". In its conclusion, the watchdog said that the way Sky operated "prevents fair and effective competition, reduces consumer choice and holds back innovation and investment by Skys rivals".

But Sky hit back at Ofcom's findings, saying this morning that it "confirms its intention to challenge Ofcom's conclusions before the competition appeal tribunal".

In a statement a Sky spokesperson said: "There should be no doubt that Ofcom's actions represent an unprecedented and unwarranted intervention.

"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."

Sky is Britain's biggest pay-TV company with 9.7 million customers. But Ofcom has said customers need more choice, innovation and more competitive pricing.

Concluding its inquiry today, the regulator said: "Today's decisions are therefore designed to ensure fair and effective competition which should lead to greater investment, innovation and choice for consumers."

Following the announcement from Ofcom, Francis Baron, Rugby Football Union (RFU) chief executive, said: "The RFU is incredibly disappointed that its concerns, and those of all other affected sports rights holders, have not been taken into account by Ofcom whose consultation process was inadequate and flawed.

"Ofcom set out to review Pay TV but in doing so have ended up interfering in the sports right market where they have no competence nor experience and their intervention will remove competition from the sports rights market.

"The role of a regulator is to increase competition in the market but in sports rights they are removing competition and disincentivising multi-billion pound businesses from bidding for rights in the future.

"We will review this very seriously indeed to decide what our actions may be. Clearly we will be taking appropriate legal advice on this matter." ADNFCR-1783-ID-19699283-ADNFCR

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