Update: Ofcom may force BSkyB to share channels

26th Jun 2009 12:22

Satellite broadcaster BSkyB should be forced to share its premium channels, according to media regulator Ofcom. Ofcom has threatened to intervene directly in the next auction of Premier League football rights and force Sky to also make its films available to other broadcasters. BSkyB disagreed with Ofcom's conclusion and said it would seek all "legal avenues" if there is any intervention.The media regulator said its proposals were designed to address its concerns about the restricted distribution of premium sports and movie channels operated by BSkyB. "The consultation notes that there may be a case for specific targeted interventions in relation to subscription video on demand movie rights and to the next FA Premier League auction of live broadcast rights," the regulator said. Commenting on Ofcom's proposals, a Sky spokesperson said: "We disagree fundamentally with Ofcom's approach, analysis and conclusions. In light of Ofcom's determination to pursue its preferred outcome, we will use all available legal avenues to challenge this unwarranted intervention."Gavin Patterson, chief executive of BT Retail, welcomed the proposal but said now Ofcom needs to enforce its suggestions. "Prices have been too high for too long but this could all change if Ofcom breaks Sky's stranglehold," he said. Ofcom says Sky is acting on an incentive to limit the distribution of premium channels to rival TV platforms. "As a result, Ofcom believes consumers face a restricted choice of channels and platforms in the short term. In the longer term, new platforms based on innovative distribution technologies may be prevented from developing without access to this content."Its study suggests Sky is earning aggregate returns in excess of its cost of capital, and is likely to continue to do so. "These returns appear to be higher in Sky's wholesale business than its retail business, and higher in the wholesale of movie channels than sports channels. Our concern is that they are likely to be reflected in high prices paid by consumers," said Ofcom.It says the most appropriate way of ensuring fair and effective competition will be to force Sky to make its premium channels available to other retailers on a wholesale basis. "We do not believe that this proposed remedy would have a disproportionate impact on Sky, since we consider the proposed prices are above the level required to allow Sky a reasonable return on its content costs," it added.Ofcom has asked interested parties to respond to the proposals by 18 August.