Wednesday, March 31, 2010

A New Dawn For UK Broadcasting ?

Wow, we wake up this morning to a very different TV marketplace in the UK. OFCOM has told Sky that is needs to reduce wholesale pricing for providing its premium sports channels.

It's a bold move by the regulator which Sky is already wriggling out of by referring the directive to the Competition Appeal Tribunal.

If they lose, no doubt they'll create some new channels or put more stuff on the red button in order to preserve their virtual monopoly over top level non-reserved sports in the UK, so maybe the actual impact will be small.

Essentially what this does is create a more level playing field for sports rights, so it's also a hefty blow to sports organisations and especially Premiership footballers, whose hedonistic lifestyles are paid for directly from the inflated prices Sky pays for sporting rights in order to lock in customers to their broadcast services.

But is it the right move? After all, you could argue that there is a marketplace and ITV or Five could easily bid for the sports right directly. In retrospect the demise of Setanta probably did no good for Sky.

The situation is made more complex by the lack of independent broadcasters in the UK. There are the two PBS operators, BBC and Channel4, there's ITV and Five, and then there are Fox, BSkyB, Virgin Media's channels, which are all controlled (or will be controlled) by, yes you guessed it, BSkyB. The UKTV channels are in limbo (I expect their co-owners BBC Worldwide to buy them back and be privatised after the election and become a major new broadcaster).

Perhaps OFCOM would have done better to focus on the number of channels an operators should be allowed to run, or on the practices of the sports federations themselves.

It'll be interesting to see how this one plays out. Certainly OFCOM has created a more level playing field. Whether this is anti-competitive or not is difficult to see at present.