Ofcom Seeks to Boost Competition in U.K. Pay-TV Market

LONDON: British media regulator Ofcom has issued a new consultation as part of its investigation into the pay-TV market, addressing its concerns about the restricted distribution of Sky’s premium sports and movie channels.

Ofcom said it was concerned about the limited distribution of certain key sport events and first-run Hollywood movies airing on Sky’s premium channels. "Ofcom considers that Sky has market power in the wholesale supply of channels containing this attractive content, and that it is acting on an incentive to limit the distribution of these channels to rival TV platforms," the regulator states. This has created a situation where consumers are facing a restricted choice of channels and platforms. This in turn may inhibit the launch of new platforms.

To remedy this situation, Ofcom proposes that Sky make its premium channels available to other retailers on a wholesale basis. Ofcom is consulting on proposals to put in place a wholesale must-offer obligation, containing a range of regulated prices. "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."

Ofcom has also expressed concerns over SVOD movie rights and the next FA Premier League auction. According to Ofcom, Sky currently holds the SVOD rights for all the major film studios, but does not exploit them on its satellite platform. "Separating the sale of subscription video on demand movie rights from standard subscription rights could allow innovative new services to be provided, especially on internet TV and cable platforms. Ofcom is considering a market reference to the Competition Commission on this subject. However, we propose first to explore the commercial intentions of the Hollywood studios, and whether these would reduce the need for regulatory intervention."

The regulator also says it is reviewing with the Premier League how it intends to ensure that the next auction complies with competition law.