Ofcom summons up courage to tackle BSkyB

March 31, 2010

steve_barnett- Steven Barnett is professor of communications at the University of Westminster, and a writer and commentator on broadcasting issues.  His first book, published in 1990, was on the relationship between television and sport. The opinions expressed are his own.-

Today is a historic day for British television: the first time in its brief six-year history that the supposedly uber powerful Ofcom has been prepared to flex its muscles to tackle the brute force of BSkyB’s overwhelming dominance in pay television.

It is an issue that has blighted the television industry for years, disadvantaged consumers, put companies out of business, and sent competitors, regulators and politicians running for cover.

Finally, after three years of exhaustive analysis, the regulator has had enough: BSkyB has been ordered to lower the prices at which it sells its premium rate channels to other platform operators such as Virgin and BT.

Consumers may even be able to buy sports and movie channels without being forced to pay for a bundle of countless other unwanted channels.

We can now expect a blaze of carefully orchestrated outrage not just from the hugely influential head of BSkyB itself, James Murdoch, but from its formidable number of friends and allies. For the power and influence which this single corporation exerts on British public and political life is quite extraordinary.

We have already heard the first rumblings from powerful sports bodies, threatening legal action and warning of “serious consequences” for sport.

There will be excoriating editorials in the Murdoch-owned papers denouncing the meddling bureaucrats of this unelected quango. There will be politicians who will be cornered in their constituencies by the incompetent chairmen of tottering football clubs, desperate to convey the vital importance of BSkyB’s cash to saving their personal fiefdoms.

And there will be other politicians – I know this because some have told me – simply too anxious about the sheer muscle of this unrestrained, unaccountable monolith to want to speak out against its trampling of the basic principles of fair trading.

Hopefully, the less suggestible legislators and the non-Murdoch press will take a closer look at the PR blather.

Take, for example, the oft-repeated claims of the England and Wales Cricket Board that grassroots women’s cricket is now thriving thanks to Sky’s injection of cash.

Official figures from Sport England show a different story: according to its representative survey of over 300,000 people, the number of women participating in cricket in the last year has actually gone down.

Then there’s the unspoken £38 million of (taxpayers’) cash which Sport England agreed to invest in English cricket last year. And the millions invested by local authorities in playing fields and leisure centres around the country.

Can it possibly be right that the body charged with looking after our national sport now connives shamelessly in a public relations exercise designed to ensure that most TV viewers are deprived of its most popular matches?

In Australia, you would be roasted on a barbecue for less. In the UK, we shrug.

There are similar tales of exaggerated woe being bandied around by other sports bodies in hock to BSkyB’s cash.

The myth that Sky and only Sky can bankroll our sporting heritage is not only wrong but fundamentally dangerous. We desperately need more plurality in the sports rights market for the sake of British sport as well as UK consumers.

This, of course, is just the beginning.

BSkyB demonstrated after its November 2006 raid on ITV’s shares that it will exhaust every conceivable legal and constitutional loophole to protect its position.

It took more than three years, including one of the most damning reports that can ever have emerged from the Competition Appeals Tribunal (CAT), to prise that shareholding from Sky’s grasp. The company has already announced that it will be taking this matter to the CAT.

Greg Dyke once likened BSkyB to a 500-pound gorilla, but that doesn’t do justice to the combination of brute force, intimidation and sheer ruthlessness.

Ofcom has now summoned up the courage to hurl the first pebble at this Goliath whose stranglehold on our major sports has been amply demonstrated by their immediate threats of legal action to protect Sky’s monopoly and their own rights fees.

But despite these cries of faux outrage, this could be the beginning of a serious attempt to bring the gorilla to heel – if other key stakeholders are prepared to pull their weight.

Politicians should now be supporting Ofcom and speaking out for the public interest; competitors like Virgin and BT need to mount their own counter-offensives; both Labour and Conservative front benches need to resist their natural inclination to kowtow to the Murdoch dynasty; media lawyers, civil society groups, the few sports bodies whose loyalty has not yet been bought and the  consumer groups who have been unaccountably quiet all need to add their weight to Ofcom’s long overdue regulatory initiative.

This is not just a technical competition issue, but a fundamental question of who controls the television market-place and British sport.

Comments

I profoundly disagree. Seems to me that Sky are being punished for investing where previously no-one feared to tread. They have pumped billions into Digital, HD and now 3D television whilst building their platform, and demonstrated considerable appetite for risk. Why should companies like Virgin and BT, who have been relatively timid themselves, now be able to step in and capitalise on Sky’s entrepreneurial spirit ? Let us not forget that Sky do not have a monopoly – there are protected listed events, and rights such as those for the Premier League are open to all. If the BBC choose to pump money into the environmental vandalism that is Grand Prix racing (whilst Sky sponsor British Cycling) then that is their prerogative.

Posted by Dr. Arthur Trumpington | Report as abusive
 

Unfortunately, this is a market which is now so heavily distorted that all prospective competition will be shut out unless the regulator intervenes. Risky investment is the essence of any business, but that is really no excuse for using overwhelming market power to disadvantage consumers and restrict competition. The sports rights market is so heavily weighted towards the incumbent (long-term tie-up of rights, strong subscriber base generating constant revenue) that it is operates effectively as a monopoly. Hence the public interest need to intervene (which is precisely why we have rules to promote fair competition).

Posted by Steven Barnett | Report as abusive
 

It’s Great News
Sky doing a daligh robbery
They have cheated 1000s in sky platform with tie up to Santanta, Zee TV, Sony asia etc..
For Eg: Above to sky charges these channels use to charge 40 GBP every month.

Finally offcom got guts to control this. Congrats from Heart

Posted by Mathew | Report as abusive
 

Apart from the obvious merits of the Ofcom action which is better late than never I have always been very concerned with the enormous power and influence that a man like Murdoch the Australian/American/? exerts on the flow and content of information in this or any other democratic state. I know this is slightly off subject but I would like to see a debate about whether one individual should be allowed to own and control more than one newspaper or television station either directly or indirectly.

Posted by Ralph Weston | Report as abusive
 

Where I live in North Wales I am unable to get Freeview, so that means I have to subscribe to Sky. Well, if I want more than the basics I have to pay, yet the variety of Freeview stations exceed the stations on Sky unless I am a paid up subscriber! For example Dave is free to air on Freeview and yet on Sky I have to pay.

I could go for FreeSat, but that would involve me splashing out on another box, but again, the channels are limited and I have no option for additional services, so Sky does provide a service, but sadly for the TV that I watch, I am paying through the nose.

What grieves me more is if I was to unsubscribe from Sky (since I have a Sky+ box) if I wanted to use the recording facility on the box that I bought, I have to pay £10 a month! In short, they have me over the metaphorical barrel.

I would welcome a package that allows me to pay for what I watch, say like an electric metre, where you pay per hour. For a 30 day month (at £18 a month) that would equate to 2.5 pence an hour of television viewing, I suppose for prime time viewing, films, sports, they could charge more, say 5 pence a hour… (?)

As for the recording facility, I own the machine, so why should I pay for that? It just like owning a VCR, just a digital version. – That’s what I was told by a Sky employee. Any thoughts there?

I will not pay an extra £10 a month for HD, that’s absurd, nor will I subscribe to Sky’s upcoming 3D service. It’s only TV at the end of the day.

It’s about time Ofcom intervened, some people don’t get a choice of alternative suppliers for TV, telecommunications or broadband without being subjet to additional fees.

Posted by Chris | Report as abusive
 
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