Kangaroo should hop off

The UK Competition Commission has ruled that the proposed ‘Kangaroo’ joint-venture to download public broadcasting programming to PCs would restrict competition. We can now see why Ashley Highfield, Kangaroo’s CEO jumped ship on Nov 10 for a job with Microsoft.

Kangaroo is/was the planned j-v between the BBC, ITV and Channel 4, designed to provide a one-stop shop for the trio’s output. The Competition Commission’s (CC) preliminary findings stated it “will restrict competition in the supply of VOD services in the UK”.

“The CC has concluded that the joint venture is likely to result in a substantial lessening of competition in the supply of UK TV VOD content at the wholesale and retail levels. The CC does not, however, expect the joint venture to lead to an SLC in online advertising or content acquisition.” The full report will be published shortly.

“Kangaroo’s web-based service will provide viewers with the opportunity to access recently-aired (catch-up) programmes as well as archive content. Catch-up content will continue to be available on the broadcasters’ individual websites, so a key element of Kangaroo will be access to archive programming.”

“The parties expect the great majority of views to be free and funded by advertising but customers will be charged for some content. As well as providing a retail service to customers, Kangaroo plans to license its VOD service, or a substantial part of it, to other VOD services on a wholesale basis.”

“The CC has also published for consultation a notice of possible remedies to address the ‘substantial lessening of competition’. These include putting in place access remedies to control the way that content is offered to other providers and/or making material modifications to the terms of the joint venture. This might include, for example, adjusting the scope of the joint venture’s activities or the terms of exclusivity between the joint venture and its parents. In the event that none of these are effective, prohibition would also be an option. When considering these remedies, the CC will also take into account any relevant customer benefits which arise from the joint venture.”

The Kangaroo partners said in a joint statement: "We will continue to make the case for a service that will be both in vast majority free and non-exclusive, and of great benefit and value to British consumers.

"These suggested remedies are not an exhaustive list. They represent possible options that the commission has identified as a starting point for discussion. The shareholders remain committed to engaging with the commission and will continue to work towards launching the service next year.

"Today's announcement represents the provisional findings from the Competition Commission, at the mid-point in this process. We welcome the commission's recognition that ‘UKVoD [Project Kangaroo] clearly has much to offer’. We look forward to the dialogue on these and other potential remedies with the commission over the coming weeks."

The CC says it will now hold further hearings with the main and interested parties before publishing its final decision on the competition issues and remedies. The deadline for the final report is 8 February 2009.