SLY Win Pay-TV Appeal: The Ramifications for Football Viewers
Summary
An Ofcom decision requiring *** to sell its *** Sports 1 and 2 channels to its competitors at a regulated price has been overturned giving *** an important victory against its pay-TV rivals.
Background
For some time Ofcom has been investigating into the way that Premier League (PL) football is distributed to consumers in the UK. Its main concerns were that *** (as a wholesaler and retailer of PL football through its *** Sports channels) could have had an interest in limiting the distribution of premium content, and that it could set its prices at a level as to make selling its *** Sports channels uneconomical for its competitors like Virgin and BT Vision.
In December 2007, Ofcom launched an investigation into the pay TV market in the UK. Ofcom had competition concerns about the way premium content is distributed by ***. It issued a number of consultations and in March 2010 published a Decision imposing an obligation for *** to sell its *** Sports 1 and 2 channels to its platform competitors (Virgin, BT Vision and Top Up TV) at a regulated price.
Ofcom’s main concerns were that:
- *** had an interest in limiting distribution of premium content, possibly as a result of a ‘desire to limit the growth of potential competitors’; and
- *** could, in theory, set their wholesale prices at a level above the competitive framework making it uneconomical for other broadcast retailers to compete with ***.
Both these outcomes were beneficial to *** as it would mean that subscribers for example, to BT Vision, would not be able to subscribe to *** Sports because such channels were only available on ***. (Note: *** Sports channels have been available on Virgin for a number of years but Virgin had argued at a price which made selling them unprofitable).
Ofcom Decision
The Ofcom decision in March 2010 required *** to offer at a wholesale level its *** Sports 1 and 2 channels at a price determined by Ofcom. This would have provided a mechanism for other platform providers to gain access to *** Sports 1 and 2 on fair and reasonable terms. The decision would have meant, the wholesale price *** charged for *** Sports 1 and 2, to platforms such as Virgin Media or BT, would have been reduced by around 10%.
So What Has Happened Now?
*** appealed the Ofcom Decision on a number of grounds including the fact that Ofcom’s evidence that it used to show that *** did not constructively negotiate in good faith with other platforms for the provision of *** Sports 1 and 2 was flawed. The Competition Appeal Tribunal (the CAT), where the appeal was heard, ultimately accepted that Ofcom misinterpreted the evidence of the negotiations and as a result, Ofcom’s conclusions were inconsistent with the evidence. As such, the CAT decided for this, and other reasons, Ofcom’s Decision should be overturned.
The Significance of the Decision
- As *** does NOT have to provide *** Sports 1 and 2 to platforms like BT through an Ofcom regulated price they are free charge what they believe it appropriate to other platforms like BT Vision to show its *** Sports channels. Platforms like BT Vision and Top-TV (possibly along with Virgin) will have to individually negotiate a price with *** for *** Sports 1 and 2. Presumably, if *** does not like the offer their competitors propose they can refuse to supply the channels.
- BT Vision has somewhat safeguarded its position through winning two packages in the latest PL auction process. BT’s desire to win the latest PL rights at source in latest auction may have also been to ensure they did not have to rely on *** to show live PL matches. It means regardless of an agreement with *** over *** Sports 1 and 2 on its platform, BT Vision will have a number of games from the 2013-14 season to screen to its subscribers.
- If commercial negotiations fail between BT Vision and *** it may start a PL broadcasting war with BT potentially refusing to sell its PL channel (from 2013) on the *** platform. This could leave both *** and BT customers without a full set of PL matches to watch on their own platform.
- There is little doubt that this is a crushing blow for the regulator Ofcom after over 3 years of investigations and consultations into live PL matches. Although further Ofcom action cannot be ruled out against ***, they will have to go back to the drawing board.
