By the end of this month we’ll know whether Rupert Murdoch’s latest attempt to integrate Sky into his wider entertainment portfolio is to be subjected to further regulatory investigation.
Given the perceived – though, as critical media coverage of Theresa May might be said to disprove – closeness between Mr Murdoch and the Conservatives it’s more likely than not that Culture Secretary Karen Bradley will proceed with a full phase two Competition and Markets Authority probe of the deal.
Should it deal eventually get the go-ahead it’ll be important that the government be able to show it acted on impartial advice.
Of course, this won’t stop some from criticising a favourable decision – the CMA’s finding that BT’s takeover of EE would have no adverse impact on competition is still the cause of much complaint – but fair-minded people will at least see ministers acted on the facts as presented to them.
Sky is a longterm innovator which led the way in breaking the hold the BBC, ITV and Channel 4 enjoyed over UK television.
It helped to popularise the idea of pay-TV even though cable firms already offered subscription channels and, in the UK, it brought the recording of subscription content to the masses.
But just as Sky brought competition to the UK – and profited handsomely from doing so – it now faces fierce competition from old rivals and newcomers alike in a media landscape which has changed dramatically since it launched in 1990.
It was competition from Netflix and, later, Amazon as well as the attractiveness of Freeview, which continues to offer most of the UK’s most watched channels and shows, that pushed the company into launching NOW TV.
Positioned as an add-on to Freeview, the low-cost, contract-free service makes Sky’s most attractive content available on terms which even the most committed of pay refuseniks would give a second glance.
And, after years of lacklustre efforts by ITV Digital, Setanta and ESPN, Sky faces real, meaningful competition in the sports sector from BT which has already taken several big competitions from the broadcaster, including the Champions League and Australian cricket.
In addition, BT’s multi-year deal with AMC, as well as carriage deals with all major independent channel owners and investment in 4K, gives it an increasingly attractive platform with which to compete with Sky.
The days of Sky having a near-monopoly on the UK pay-TV sector are long gone and are never coming back.
Given that competition is now enshrined in the UK, there’s little reason not to allow the Fox takeover to proceed, subject to some conditions around content availability.
Some will call for Sky to have to wholesale all of its channels to other networks and pay-TV providers, but I’m not convinced this would be a proportionate response – Sky’s not the only firm with exclusive content and forcing only one to share the results of its investments seems unfair.
And, in any event, it’s likely the pure streaming services would be unable to take advantage of such a remedy as Sky’s rights to shows are generally tied to a traditional broadcast. So a requirement to share content would only really benefit BT, TalkTalk and Virgin Media, two of which already have commercial deals for the channels anyway.
And we know from deals such as BT’s tie-up with AMC and Netflix’s virtually globally tying up of the Star Trek rights that there’s little content which Sky’s rivals could not either outbid it for, or force it to pay more for, if they were minded.
So it’s in this area – content rights – where I think a few regulatory impositions should be made and could be justified.
Instead of allowing Sky to pre-buy or pre-invest in Fox’s output, it might be better to mandate that either all or a substantial proportion be sold on the open market, a rule which would allow Amazon, Netflix and others to bid if they wished.
This would avoid – unlike the forced wholesaling of channels – Sky’s rivals being able to sit back and feed off of its investments while ensuring ever greater amounts of content didn’t become locked into a single provider.
But whatever conditions are ultimately attached to the tie-up, there are no realistic competition grounds which would justify blocking it – no-one is really hurt if they have to buy a Blu-ray because their TV provider of choice doesn’t have a specific show – and the deal should be allowed to proceed.
