BSkyB, Competitors Await U.K. Regulatory Decision on Channel Pricing
"The outcome could potentially have notable consequences for BSkyB," says UBS analyst Polo Tang.`
LONDON - A regulatory body focused on competition issues here will on Wednesday rule on an issue that will affect U.K. pay TV giants BSkyB, BT, Virgin Media and others.
The Competition Appeal Tribunal (CAT) will rule on U.K. media regulator Ofcom's 2010 decision to regulate wholesale pricing of BSkyB's Sky Sports to third parties like telecom giant BT and cable operator Virgin Media. "The outcome could potentially have notable consequences for BSkyB," in which Rupert Murdoch's News Corp. owns a 39 percent stake, said UBS analyst Polo Tang.
In a worst case scenario for BSkyB, BT, which recently won two packages of English Premier League soccer rights in a challenge to the satellite TV firm, gets more BSkyB content at a lower price, he said.
"The CAT ruling could effectively set the principle that BSkyB's wholesale pricing should be regulated and may even extend the channels that BSkyB has to offer," Tang said. "With BT getting more aggressive in pay TV, this outcome could potentially be quite negative for BSkyB."
Currently, BT only has access to Sky Sports 1 and 2, but not Sky Sports 3 and 4, a Formula 1 network or its HD channels.
However, in a best case scenario, "the CAT could overturn Ofcom's decision and leave BSkyB to determine its own wholesale pricing and what it makes available to rival platforms," Tang said. "This could potentially limit what BT could do in the UK pay TV space after BT recently won 25 percent of the English Premier League rights."
Tang likes the stock of BSkyB, but said that "the key medium-term issue for us is how aggressive BT will be in the pay TV space, and visibility on this remains limited for the time being."
Late last week, the U.K. Competition Commission had handed BSkyB a key regulatory victory when it confirmed provisional findings that the company has no material advantage in pay TV movies these days thanks to the emergence of Netflix and Amazon.com's LoveFilm.