It must sometimes feel like the whole world is out to get British Sky Broadcasting. The UK broadcaster has received a potentially grave warning from the Competition Commission over its exclusive contracts to broadcast Hollywood movies before anyone else on its Sky Movies channels (via FT.com).
The commission says in its initial findings that Sky has made “excess profits” from Sky Movies and that the risks the company took may not justify its return. But the commission is only at the preliminary stages of its investigation on pricing and market impact after it was handed the case by Ofcom last year, and it is accepting submissions and contributions. Read the working papers here or read FT.com’s coverage.
A BSkyB spokesman tells TheMediaBriefing: “We stand by our record in bringing choice and innovation to UK consumers. We believe that Sky’s profitability today reflects its past investments and its success in delivering highly valued products to customers. The CC’s movies investigation is at a preliminary stage and we will respond to its working papers as the process continues.”
But these are tense times in Osterley. Spoonerism-plagued Culture Secretary Jeremy Hunt is weighing up whether to refer News Corp’s takeover bid of the company to the Competition Commission (as Steve Hewlett puts it, Hunt may well be “toast” if he ignores Ofcom’s advice and chooses not to refer).
Not only that, the company is facing a potentially disastrous ruling in the European Court of Justice over the amount it charges for access to Sky Sports: Portsmouth landlady Karen Murphy may just re-write the rules of the richest football league in the world, England’s Premier League, and the TV rights system that supports it. She’s upset at having to pay more than Ç_¶œ7,000 a year to screen Sky Sports and was fined for using an imported Greek TV decoder to show matches for less than Ç_¶œ1,000.
European Commission advocate general Juliane Kokott has advised the ECJ to rule in favour of Murphy and said: “Territorial exclusivity agreements relating to the transmission of football matches are contrary to European Union law” (Guardian.co.uk has much more on this).
Quality vs fairness – should regulators clip sky’s wings again?
For opponents of Rupert Murdoch, News International, Sky, The Times and all things associated with News Corp, this is all jolly good fun. Beset on all fronts by regulators, hacked off celebrities suing for suspected illegal phone-tapping, politicians and liberal media, some may like to daydream that Murdoch’s 40-odd-year dominance of the UK media economy is under threat.
It could well be that Sky Movies has an unfair stranglehold on movies and it prices out Virgin, BT Vision and LoveFilm with its exclusive deals. It could well be that Sky is forced to offer wholesale access to its movie channels – just as Ofcom forced it to offer Sky Sports to competitors cheaply last year.
But be careful what you wish for. Sky does invest in sport, news, drama and culture programming; football may be awash with filthy lucre but enjoy millions watching and Sky subscribers and shareholders foot the bill. It’s worth noting that no terrestrial broadcaster showed live England Test cricket on foreign soil before Sky.
The BBC will have 16 percent less income in 2016 than it does in 2010, according to BBC Trust Chairman Michael Lyons. ITV is in retreat, Channel 4 is similarly challenged and it remains to be seen whether a slimmer Five will regain confidence under Richard Desmond. Whatever undue effects Sky has on the media market, it’s a world-leading British success story that made Ç_¶œ520 million profit in the last half of 2010 and is planning to create more than 1,500 jobs in 2011.
Do we have to make a choice between fairness and quality?