UK regulator opens further probe on UK pay-TV sport pricing
DetailsEditor | 20 December 2014
In a issue that has now carried on in some form or another for over four years, UK broadcast regulator Ofcom has opened a consultation as part of its review of the country’s pay-TV ‘wholesale must-offer’.
What this has basically meant is just how much dominance the UK pay-TV 800lb gorilla that is Sky is allowed to have, a perennial issue but one with increased resonance given the recent announcement by the English Premier League that it was inviting tenders for the next batch of rights to broadcast its football games, the Crown Jewels of UK pay-TV.
One key element in any consultation will be to see what platforms could, or should be, be permitted to show sports acquired by successful bid holders. Only days ago Sky rival BT was celebrating the conclusion of a long struggle to gain rights to show Sky Sports on its YouView boxes.
Sky currently holds over 75% of live rights to Premier League football and has more than 80% of market revenues from the supply of key sports channels. BT holds around 25% of live Premier League rights, generating between 10% and 20% of revenues, but has acquired all live rights to Champions League football from next season.
Aiming to solve such issues, Ofcom said that its review will set out to determine whether it remained appropriate for regulation requiring Sky to offer its Sky Sports 1 and 2 channels to other pay-TV providers to ensure fair and effective competition in the UK’s pay-TV sector. In 2010, Ofcom imposed an obligation requiring Sky to offer to wholesale Sky Sports 1 and 2 at prices set by the regulator. This was designed to deliver choice and innovation to consumers through greater competition. The obligation has been in effect since 2010 for the Virgin Media cable and BT DTT platforms while litigation has been on-going. In November 2014, it was extended to IPTV for BT.
Ofcom said in 2010 that it would review the obligation after three years in light of developments in the market. In April 2014, Ofcom announced it was commencing this review. Yet it recognises the “significant developments” in the market since it concluded its review in 2010. These include wider availability of sports content on competing retail services, more ‘over-the-top’ content providers and new devices on which consumers can access pay-TV. It noted that bundling of pay-TV with other communications services is more common in the UK and that the role of BT in the pay-TV market has changed considerably.
That said, Ofcom stressed that it believes that the content Sky has is likely to influence the purchasing decisions of a sizeable proportion of high-value customers. Moreover it stated that retailers that do not have access to this content would find it more difficult to compete for these customers.
Given Sky’s continued strong market position, Ofcom said hat it was is seeking views on its assessment that if there was limited distribution by Sky of its key sports content, competition between pay-TV retailers may be harmed. Ofcom is also seeking views on whether, given its market position, Sky may have incentives to limit distribution of its key sports content. It observed that BT may also have incentives to limit distribution of its key sports content.
In assessing whether regulation remains appropriate or whether it should be removed, Ofcom made clear that its consultation would take account of such developments, including the outcome of the next Premier League auction.