BSkyB must offer sport channels to rivals
British Sky Broadcasting will be forced to make its sports channels available to competitors at set wholesale prices, under rules less restrictive than UK market regulator Ofcom initially set.
The stock rose as much as 3.4pc. BSkyB, the UK’s biggest pay-television provider, should offer its package of sports channels to cable operators at prices that are 10.5pc lower than the current wholesale price, Ofcom said today in a statement.
BSkyB, controlled by Rupert Murdoch’s News Corp, will be able to charge more for its package of sports channels, which most clients currently purchase, than Ofcom initially proposed.
The regulator had also intended to include high-definition channels within its ruling, which have since been excluded. The broadcaster said it will appeal the ruling.
“It’s better than the proposals Ofcom outlined back in June,” said Steve Malcolm, an analyst at Evolution Securities, via phone.
“It’s a higher price; it’s less invasive regulation in the overall suite of premium products.”
BSkyB rose as much as 20 pence to 602 pence, the biggest gain since March 12, and traded at 600 pence as of 8:52am.
Cable-TV provider Virgin Media and BT filed a complaint in January 2007, saying BSkyB’s control of film and TV rights creates a “vicious circle” that hurts competition and keeps prices high.
Setanta Sports, which also filed the complaint, was placed into administration in June.
‘Balance of power’
Ofcom’s ruling “should have gone much further than it did,” said Gavin Patterson, chief executive of BT Retail, in a separate statement.
“They have dropped movie channels, which should have been included. They should have included all Sky Sports channels not just two.”
BT said last year that it wanted to offer Sky Sports’ coverage of English Premier League soccer by the start of the 2010-11 season.
“The balance of power has taken a shift from BSkyB towards cable and BT,” said Morten Singleton, an analyst at Collins Stewart in an emailed note.
Ofcom said today BSkyB is using its “market power” in the wholesale supply of channels to limit their distribution to rivals, therefore restricting consumer choice.
The broadcaster must make a “reference offer” for other providers within six weeks.
The broadcaster must also offer its movie channels at wholesale prices if it moves the channels onto terrestrial digital television.
BSkyB said today it will appeal the ruling before the Competition Appeal Tribunal.
‘There should be no doubt that Ofcom’s actions represent an unprecedented and unwarranted intervention,” the company said today in a separate statement.