OFCOM has today ordered BSkyB to make Sky Sports 1 & 2 available on all platforms at regulated wholesale prices as well their HD counterparts “on fair, reasonable and non-discriminatory terms.”
The ruling is the culmination of a three year investigation into the UK’s pay TV market and follows complaints by Sky’s rivals that the price of the channels to them was too high to allow them to make a profit.
OFCOM claims “Sky has market power in the wholesale provision of premium channels” which it “exploits… by restricting the distribution of its premium channels to rival pay TV providers. This prevents fair and effective competition, reduces consumer choice and holds back innovation and investment by Sky’s rivals.”
Under OFCOM’s proposals Sky will have to offer the two sports channels at a wholesale price of £10.63 when sold on a standalone basis, this figure is more than 23% lower than it currently charges cable operators. The price of a Sky Sports 1 and 2 bundle is to be reduced by 10.5% to £17.14.
In an attempt to sweeten today’s findings, OFCOM has given conditional approval for Sky’s aborted Picnic service which would see Freeview households offered the chance to buy selected Sky channels as an add-on service. This go-ahead is conditional on Sky accepting the announced price cuts.
A spokesman for Sky called OFCOM’s ruling “an unprecedented and unwarranted intervention” and confirmed the broadcaster would appeal to the Competition Appeal Tribunal.
The spokesman added: “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.”