Ofcom to force BSkyB sports price cut

U.K. media regulator to broaden access to sports market

LONDON -- U.K. media regulator Ofcom is poised to slash the fee BSkyB can charge other operators to carry its sports channels, in a move that could put the next British government on a collision course with Rupert Murdoch's BSkyB.

The media regulator, which is understood to be preparing to order BSkyB to slash its wholesale fees from March, is hoping to broaden the sports market by allowing rival operators including cable operator Virgin Media and IPTV service BT Vision to offer their subscribers its Sky's sports lineup for less.

Any such move would have to be approved by the government of the day, and with an election due before June, could prove a difficult decision for the Conservative party, which has strenuously courted the support of Rupert Murdoch's U.K. newspapers in the run up to the election.

A Labour government would likewise also face the wrath of the News Corp-backed satellite operator, which has already indicated that it will fight any such move by Ofcom. BSkyB has already spent the past 24 months mounting a series of legal appeals against the regulator's decision to force it to sell down its 17.9% stake in ITV.

In September last year, when Ofcom proposed cutting Sky's wholesale charges, BSkyB CEO Jeremy Darroch said the regulator was punishing Sky's risk taking and success.

"It is clear that Ofcom's proposed intervention is not about the availability of our channels to other providers. It is about a regulator's attempts to impose price controls on the marketplace," said Darroch.

BSkyB's rivals have complained that Sky's high wholesale charges do not allow them to make a profit on offering Sky's premium-priced channels, and have said that they intend to undercut Sky's bundled prices if the regulator acts.

"I'm definitely looking forward to the decision. The case is crystal clear -- the customer benefits if they get more choice," Gavin Patterson, CEO of BT Retail told the Telegraph newspaper, adding that the company would offer Sky Sports to its customers for a price "somewhere in the mid teens," as much as £10 ($16.33) less per month than Sky currently charges for its lowest tier sport and movie packages.
comments powered by Disqus