Virgin Challenges Sky in High Court

LONDON, April 12: Virgin Media has filed legal proceedings
against BSkyB in the U.K.’s High Court in an attempt to resolve its dispute
with the satellite platform over the loss of Sky’s basic channels on the Virgin
Media cable service.

The proceedings also seek a remedy for the so-called
“onerous” rates imposed by Sky for carriage of Virgin Media Television
channels—including LIVING and Bravo—on its platform.

Virgin Media is citing Section 18 of the U.K. Competition
Act 1998 and Article 82 of the EC Treaty, both of which prohibit a company from
abusing its dominant position. Virgin says that Sky, which accounts for almost
70 percent of the country’s pay-TV subscribers, “has engaged in a strategy to
stifle competition by using its dominance against Virgin Media.”

The worsening relations between the two companies stems back
to November 2006, when Sky acquired a 17.9-percent stake in ITV as Virgin Media
(then NTL) was attempting a takeover of the British broadcaster.

In January, Virgin Media says it was “forced” to accept an
85-percent reduction in fees paid by Sky to carry the Virgin Media Television
portfolio of channels. The following month, Sky sought to double the fees it
charges Virgin to carry its basic channels, including Sky One. When Virgin
Media declined to pay the new fees, Sky ceased providing those channels to the
platform. Sky then rejected an offer by Virgin Media to resolve these issues
through legally binding arbitration by an independent expert.

Commenting on the legal proceedings, Virgin Media CEO Steve
Burch said: "This dispute is one very specific example of how U.K.
consumers are being denied the benefits of a diverse, dynamic and competitive
pay-TV market. Litigation is obviously a serious step and a last resort but we
are determined to have these issues resolved as quickly and fairly as
possible."