Sky Sports must be offered to BT’s YouView customers, says regulator

http://www.theguardian.com/media/2014/nov/05/sky-sports-bt-youview

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BSkyB will be forced to make its Sky Sports channels available to hundreds of thousands of BT’s YouView TV customers for the first time, following a ruling by UK competition regulators.

The decision by the Competition Appeal Tribunal follows four years of legal wrangling, and, while it is an interim ruling, it nevertheless marks a major victory for Sky’s rivals and media regulator Ofcom.

In 2010, Ofcom first tried to force BSkyB to offer Sky Sports 1 and 2 at a 23% discount to rivals as a curb on the satellite broadcaster abusing its dominant position in the market.

The new pricing structure proposed by Ofcom is referred to as “wholesale must offer”. Last week the supreme court rejected BSkyB’s request to challenge Ofcom’s powers to impose wholesale must offer.

“BT has always maintained that Ofcom was correct to impose the ‘wholesale must offer’ on Sky and this remedy remains essential to address the significant competition concerns with Sky’s supply of its channels,” said a spokesman for BT. “We look forward to being able to offer these channels to our YouView customers very shortly.”

The interim ruling is a victory for Ofcom, which had been hugely embarrassed by a scathing CAT ruling in 2012 that concluded the basis of the regulator’s decision to force Sky to cut the amount it charges rivals was “unfounded”.

BT challenged this decision and in February the court of appeal forced the CAT to reopen the issue, backing Ofcom by citing the existence of “significant competition concerns” in the pricing mechanism.

The CAT made a U-turn on Wednesday granting BT interim relief to broadcast the Sky Sports 1 and 2 channels via YouView for the first time.

“After more than four years of litigation and legal challenges, Ofcom’s 2010 pay-TV decision continues to serve the interests of UK consumers and this ruling is consistent with our original decision,” said Ed Richards, chief executive of Ofcom.

“Today’s ruling paves the way for more top sports to be available on another TV service and supports competition and innovation in the communications sector as we originally intended.”

Ofcom said it is now focused on reviewing the wholesale must offer remedy in light of “developments” in pay-TV, which include BT moving to spend billions of pounds to crack Sky’s stranglehold on top flight sports such as Premier League and Champion’s League football.

BSkyB said that the ruling was “purely interim” and that it would continue to fight the wholesale must offer mechanism.

“Today’s judgment [has] no impact on the ongoing legal process or the CAT’s previous dismissal of Ofcom’s core argument in favour of wholesale must offer,” said the Sky spokesman. “Ofcom itself is reviewing wholesale must offer in light of market developments and we continue to believe that this unwarranted obligation should be removed entirely.”

The CAT admitted that the main argument that had been made against making the Sky channels available on YouView was BT’s move into sports pay-TV.

However, Mr Justice Roth said BT’s move should not mean the company does not also benefit from Ofcom’s mechanism to address issues with the pricing of BSkyB’s sports channels.

“I do not think it is any answer to say that BT could obtain Sky Sports 1 and 2 if only it were prepared to offer reciprocal supply to Sky of BT Sport channels,” said Roth. “BT has spent some £1.5bn acquiring football broadcasting rights in order to improve its position on the market and I do not see that BT should be required, in effect, to deprove itself of the competitive gain from that investment in order to achieve the benefit of the wholesale must offer remedy ordered by Ofcom.”

However, Roth said he did not want to “prejudge” Ofcom’s review of the wholesale must offer mechanism, in light of the growth of BT’s TV service.

But he added: “Sky has no less a share of the total number of games than it had at the time of the pay-TV statement [by Ofcom in 2010], when the balance of those rights was held by ESPN, although I appreciate that the rights acquired by BT significantly include valuable rights to ‘first pick’ matched which ESPN had not enjoyed.”

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