ITV Wins Retransmission Case

ITV CEO Adam Crozier

"This court victory should set a precedent and help ITV in future commercial negotiations with Virgin Media," says an analyst.

U.K. pay TV giant ITV has won a European court decision against, which has been offering its channels in streaming form for free.  

At least one analyst said the court victory will set the stage for a showdown, expected this summer, with U.K. cable giant Virgin Media, part of John Malone's Liberty Global, which also owns a 9.9 percent stake in ITV.

ITV took to the European Court of Justice, with Britain's Channel 4 and Channel 5 supporting the legal challenge. The court ruled that the firm was not exempt from copyright rules under European Union laws that allow free retransmission of public service channels over cable.

Liberum Capital analyst Ian Whittaker said the decision would play into a battle between ITV and Virgin Media, which currently has a copyright exemption under U.K. law. But Britain's Digital Economy Bill, which is undergoing approval in the U.K. parliament, could change that by leaving such decisions to the market.

"We are delighted that the European Court has ruled that our channels should not be retransmitted online or on cable without our authorization," said an ITV representative. "This finding recognizes the vital importance of intellectual property protection in maximizing investment in original U.K. TV content and preventing free-riding. The government has already confirmed that the current U.K. law on retransmission (section 73 of the Copyright Designs and Patents Act) is no longer relevant and will be repealed as part of the Digital Economy Bill and, following this judgment, we now look forward to its immediate removal as the government has promised to parliament."

A Virgin Media representative said: “Culture secretary Karen Bradley and digital minister Matthew Hancock have repeatedly told parliament they do not want the public service television companies to force Virgin Media to charge free-to-air television viewers to watch ITV. Virgin Media has confidence the government will ensure public service free channels continue to be free.”

Whittaker in a report wrote: "This court victory should set a precedent and help ITV in future commercial negotiations with Virgin Media." He added: "At the moment Virgin Media is benefiting from a copyright exemption under U.K. law, but this exemption is due to be repealed under the new Digital Economy Bill. Once section 73 has been repealed, we expect ITV to enter into commercial agreements, which should allow ITV to charge retransmission fees to Virgin Media."

The analyst estimates that a £1 per month per subscriber fee was sensible. "If ITV charged Virgin Media £1 per month, this would mean an extra circa £40 million-plus ($49 million-plus) revenues at 100 percent margin (on a base of circa 3 million subs), equivalent to a circa 4 percent-plus earnings boost."