Watchdog ties Kangaroo down

Project Kangaroo, the planned online television joint venture between BBC Worldwide and UK broadcasters ITV and Channel 4, has been blocked by the Competition Commission.

The Commission today said in its final report on the subject that the venture, whose CEO, Ashley Highfield, quit in November after only four months in the job, “would be too much of a threat to competition in this developing market and has to be stopped.”

In its interim report in December the Commission looked at a number of possible remedies, including banning the partners from jointly selling prime catch-up TV content. However, it ruled that none of its range of prospective solutions went far enough.

The Commission’s final report said the Kangaroo case was about the control of content originating in the UK.

“BBC Worldwide, ITV and Channel 4 together control the vast majority of this material, which puts them in a very strong position as wholesalers of TV content to restrict competition from other current and future providers of video-on-demand services to UK viewers,” said Peter Freeman, Competition Commission chairman and chairman of the inquiry group.

“We thought viewers would benefit from better VoD services if the parties – possibly in conjunction with other new and/or already established providers of VoD – competed with each other.”

However, in response to the report’s findings, Michael Grade, executive chairman of ITV, said he was “surprised” at the decision and promised an update on the commercial broadcaster’s plans at its annual results announcement on March 4.

“We are surprised by this decision because we believed that the Kangaroo joint venture, competing in a crowded online world against dominant global brands, was an attractive UK consumer proposition, free at the point of use,” he said.

“However, in the two years since the idea for Kangaroo was born, the success of ITV.com has proved that our UK content is attractive enough to stand on its own and we remain focused on our online growth.”

A BBC spokesman, said the UK public broadcaster was committed to continuing to deliver online content through its iPlayer platform.

“We are disappointed by today’s decision that prevents the partners taking Kangaroo forward. However, we remain absolutely committed to delivering distinctive quality BBC programmes online and will continue to drive innovation through our successful iPlayer platform.”

A statement from all three joint-venture partners expressed “disappointment” in the decision.

“We are disappointed by the decision to prohibit this joint venture,” they said. “While this is an unwelcome finding for the shareholders, the real losers from this decision are British consumers. This is a disproportionate remedy and a missed opportunity in the further development of British broadcasting.”