BSkyB may have to share content

Regulator suggests reforms to pay TV market

U.K. regulator Ofcom has suggested sweeping reforms that may force BSkyB, Blighty’s leading paybox, to sell its premium channels at lower prices to rival platforms.

It also intends to contact Hollywood film studios to see if they would be prepared to sell subscription video-on-demand rights — currently held by BSkyB but not sold to its customers — to U.K. content providers other than BSkyB.

The satcaster has reacted furiously to the plans, claiming they represent “an unprecedented level of interference.”

Responding to complaints from Virgin Media and BT Vision, Ofcom has been investigating what the BSkyB rivals claim is the uncompetitive state of the U.K. pay TV market for the past 18 months.

However, Friday’s announcement from the regulator ramps up hostilities between BSkyB, chaired by James Murdoch, and Ofcom.

The regulator is already demanding that the paybox drastically scale back its stake in ITV, Britain’s biggest commercial terrestrial web. Now Ofcom wants BSkyB to sell its premium channels at so-called regulated prices.

The watchdog is convinced that such a move would enable payboxes like Virgin and BT Vision to offer better deals to U.K. consumers.

Ofcom is also seeking to encourage the growth of broadband content companies, which would also benefit from the reduction in BSkyB’s wholesale channel prices.

Ofcom insists the paybox would not be out of pocket and that its revenues would actually increase because more platforms would buy premium sports and movie channels from BSkyB. But BSkyB CEO Jeremy Darroch issued a strongly worded statement that accused the watchdog of “micro-management.”

He said: “Good regulation does not involve micro-management. Nor does it mean tinkering to reshape an industry so that it matches a preconceived ideal or a spreadsheet in a regulator’s office.

“We reject Ofcom’s assumption that it knows better than us how to create value for our business.”

The regulator’s intervention was welcomed by telco British Telecom, whose Vision service is struggling to gain subscribers.

BT Retail CEO Gavin Patterson said: “The proposal to force Sky to wholesale its content is welcome, but we now need Ofcom to step up the pace and to enforce this rigorously.”

Ofcom has given interested parties until Aug. 18 to comment on the proposals.