Anger as Sky ruling overturned

UK satcaster BSkyB’s pay-TV rivals have been dealt another blow after a directive to lower the price at which Sky offers its premium sports channels to other platforms was overturned.

The Competition Appeal Tribunal (CAT) has ruled that concerns from media regulator Ofcom over the way Sky distributes the Sky Sports channels was “unfounded.” Sky Sports carries most of the lucrative English Premier League football matches.

A CAT judge also rejected the idea Sky had “deliberately withheld from other retailers wholesale supply of its premium channels” and said Ofcom’s findings had been “inconsistent with the evidence.” Sky welcomed the verdict and said it supported claims it has made consistently over the past two years.

In March 2010, Sky was ordered to charge its rivals 23% less than the rate at the time. This would have meant Sky offering the channels individually for £10.63 (US$16.61) or £17.14 as a pair (a 10.5% discount) and came after a three-year inquiry into the rights.

The new verdict was meet with incredulity from Sky’s UK rival Virgin Media. A spokesman called it “simply not credible” and noted the Competition Commission (CC) had last week referred to the UK’s pay-TV market as “not working in the interests of the consumer,” in a separate ruling.

“We await the full judgment and will pursue all available options to get a better deal for consumers,” added the spokesman.

Ofcom echoed Virgin, noting it was “very surprised and disappointed” by the ruling and also pointed to the CC’s statement on the pay-TV market. “We will therefore immediately consider what further steps we should take to ensure there is effective competition in the pay-TV sector, in line with our duties,” it added.

In its statement, telco BT said it was “extremely disappointed,” and added: “We believe this judgement is not in the best interests of fair competition for customers. Whilst BT will need to reflect on the detail of the decision when it is available, BT is committed to pursuing all regulatory options in order to ensure greater competition for pay-TV customers.”

Sky said: “The evidence shows Sky has engaged constructively with other distributors over the supply of its premium channels. This finding supports the argument that Sky has been making consistently over the last five years.”

It also welcomed CAT’s assertion that Sky’s wholesale rate card did not obstruct fair and effective competition for the Sky Sports channels.