'OFCOM' orders sky sports to make their coverage more widely available to broadcasters and viewers alike.

Blackshaw, Ian

Following a three-year investigation into the UK Pay TV market, the UK Broadcasting Regulator 'Ofcom', has ruled on 31 March, 2010 that Sky Sports (dedicated sports channels of BSkyB, owned by the media tycoon Rupert Murdoch) (Sky), which carries exclusive coverage of Premier League football, English cricket and domestic rugby union, be made available to rival broadcasters, such as BT and Virgin Media, for a monthly fee of [pounds sterling]10.63 per subscriber instead of [pounds sterling]13.88. With Top Up TV also keen to show football, Ofcom believes that, as a result of its ruling, there will be more choice for viewers.

Ofcom considers that Sky "exploits their market power", and this "prevents fair competition and reduces consumer choice".

Sky and the Governing Bodies of the sports affected claim that they will lose out on TV money as a result of the Ofcom ruling, and, not surprisingly, are very unhappy about it. They are, therefore, considering launching a joint legal challenge against the Ofcom ruling. In any case, Sky has announced that it will appeal against the decision, following an initial application to the UK Competition Appeal Tribunal, for a stay of execution of the Ofcom ruling.

A spokesperson for Sky described the Ofcom ruling as an "unprecedented and unwarranted intervention," claiming that customers were already "well served with high levels of choice and innovation" and warning that "consumers will not benefit if regulators blunt incentives to invest and take risks".

The Governing Bodies of the sports concerned are united in their condemnation of the Ofcom ruling, claiming that it will cut the price of their television rights and that it will impact on the funding of 'grassroots' sport. Sky spent [pounds sterling]944m in 2009 on sports broadcasting rights - a not insignificant sum!

Richard Scudamore, the chief executive of the English FA Premier League, described the Ofcom ruling as an "ill-judged and disproportionate intervention". He said: "We do not rule out a challenge to protect the interests of fans, clubs and the wider game." A statement from the Premier League itself added: "It will be harder to recruit and retain top talent."

Francis Baron, the outgoing chief executive of the Rugby Football Union, said: "We believe this is little more than a confiscation of our rights by Ofcom dictat. We think it is grossly unfair and our lawyers are looking into it."

As for English cricket, Steve Elworthy, the ECB's director of marketing and communications, warned that the ruling could have implications for the amount Sky would be willing to pay for sports rights with a knock-on effect on funding for the game. According to Elworthy: "A decision like this could lead to less investment in sport. It fails to consider the damage it could cause to sports from the grassroots upwards and that's our biggest concern."

Incidentally, the current ECB deal with Sky is worth [pounds sterling]300million over four years and ends in 2013, and there are already fears that proposals to make 'the Ashes' a listed event - reserved for free-to-air broadcasters - would reduce the value of the rights.

So, what are the reasons for and the legal basis of the Ofcom ruling against BSkyB?

According to Ofcom, their decision will deliver significant benefits to consumers in terms of:

Choice: Premium sport, such as Premier League football matches, will be available to around 10 million free-to-view-only homes receiving TV through an aerial, and via other TV platforms. As a result of these decisions, there could be around 1.5 to 2 million additional consumers of premium TV channels by 2015.

Innovation: Consumers will, in the future, enjoy a greater range of innovative services following fresh investment by competing pay TV providers. This could include, for example, new interactive and ondemand services and a much wider range of TV package options. These innovations will also help to drive the deployment and take up of super fast 'broadband' networks.

Price: Consumers are also likely to benefit from the availability of smaller, lower-priced TV packages, including Sky Sports 1 and 2, and a greater range of 'bundles' combining pay TV, broadband and telephone services.

As for the Legal Rationale: Ofcom has concluded that Sky has market power in the wholesale provision of premium channels and that Sky exploits this market power by restricting the distribution of its premium channels to rival pay TV providers. This prevents fair and effective competition; reduces consumer choice; and holds back innovation and investment by Sky's rivals. In other words, Sky is abusing its dominant position in the market for premium sports broadcasting, contrary to UK and European Union (EU) Competition Rules.

Ofcom's rulings are, therefore, designed to ensure fair and effective competition, which, in turn, should lead to greater investment, innovation and choice for consumers. Rather than, as claimed by the sports governing bodies concerned that sports fans are losing out, I would argue that they stand to gain significantly from reduced prices for those who want to pay and broader platforms, including free-to-view TV, for those who do not, on which broadcast sport is available in the UK.

It will be very interesting to see how far Sky and the Sports Governing Bodies concerned get with their legal challenges, as, it seems to me, that Ofcom have an open and shut legal case in accordance with the well-established objectives of Competition Law: extending consumer choice and driving down prices! Furthermore, I do not think that the EU 'specificity of sport' argument will help the challengers!