Ofcom’s long running review of competition in the UK pay digital TV market took a step forward today with the publication of “a further consultation as part of its pay TV market investigation”.
The consultation sets out details of a proposed ‘wholesale must-offer’ obligation for Sky. This obligation would require Sky to sell on premium sports and movies content at regulated prices. The key content includes FAPL football and first-run Hollywood movies. Ofcom believes that this is required in order to ensure “consumers benefit in the short term from an increased choice of supplier and of platform, and in the longer term from enhanced innovation and investment, especially on non-Sky platforms”.
The report released today states that “Ofcom considers that Sky has market power in the wholesale supply of channels containing this attractive content, and that it is acting on an incentive to limit the distribution of these channels to rival TV platforms.” Ofcom goes on to say that this is limiting consumer choice in the short term and in the longer term may result in stifling innovation in rival pay TV platforms.
These are very strong statements from Ofcom and ones which Sky will no doubt contest strongly. Ofcom goes on to say that they do not think the “wholesale must-offer” obligation will adversely affect Sky as they will be able to charge a wholesale rate on which they will make a “fair” margin.
Ofcom revealed that it is also considering whether there is a case for targeted interventions on subscription video-on-demand (SVoD) movie rights and the next FA Premier League auction.
Clearly the process has a lot further to run and this is just another “consultation” released by Ofcom as part of the ongoing market investigation, but it certainly can be taken as a clear statement of intent on behalf of the regulator.