Ofcom publishes pay TV review

Sky must offer to supply Sky Sports 1 and 2 to other platforms at a wholesale price set by Ofcom, according to the conclusions of the regulator's investigation into the UK pay TV market.

As part of the same investigation Ofcom gave conditional approval to Sky and Arqiva's request to offer pay TV services on digital terrestrial TV (known as "Picnic"). However, Ofcom said that approval of Picnic is subject to Sky implementing a wholesale deal under the supply obligation for Sky Sports 1 and 2. Additionally, if Sky decides to offer movie channels on digital terrestrial TV then those channels must also be offered to other digital terrestrial TV operators. To help 'promote future innovation' Ofcom has not set wholesale prices for the HD channels but requires them to be offered on fair, reasonable and non-discriminatory terms.

Ofcom said that it is consulting on its proposed decision to make a reference to the Competition Commission asking the Commission to address concerns regarding the sale and distribution of subscription video-on-demand premium movie rights (but which cannot be addressed fully using Ofcom's powers).

Ofcom began its investigation into the pay TV market in March 2007 after receiving a submission from BT, Setanta, Top Up TV and Virgin Media. Separately, in 2007 Sky and Arqiva made a proposal to replace Sky's free-to-air channels on digital terrestrial TV with pay TV services.

As the two issues were closely related, in June 2009 Ofcom suspended consideration of Sky and Arqiva's application pending the outcome of the pay TV investigation.

Ofcom undertook extensive analysis and conducted three public consultations. Today's statement is the conclusion of this process.

Sky has confirmed its intention to challenge Ofcom's conclusions before the Competition Appeal Tribunal. Commenting on Ofcom's 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."

DTG Staff  |  31.03.2010

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