Sky will be forced to offer its two key sports channels at prices set by Ofcom, but the watchdog washed its hands of Sky Movies.

It has also green-lighted the broadcaster's plans for 'Picnic' pay-TV on Freeview, following an investigation into pay television.

The argument over Sky's wholesale rates of its premium content has been raging for years, and Ofcom's investigation has become a huge focal point of the entire industry.

Ofcom published its phase three document on Pay TV and laid out its three rulings – stating that Sky must sell Sky Sports 1 and 2 to its rivals at prices set by the media watchdog but suggesting that the Competition Commission should investigate movie rights sales.

Having a Picnic

The blow was softened slightly by Ofcom allowing Sky's mothballed Picnic program – bringing subscription television to digital terrestrial television – a place in the spectrum if it abided by the rulings on sport and movies.

Plus, the company's high definition premium content has not been ruled on, meaning that Sky's top level HD content need not be offered to rivals at Ofcom-set prices.

"The pay TV sector has delivered substantial benefits to consumers since its emergence in the early 1990s," said Ofcom.

"More than 12 million consumers now pay to access a greater choice of content, at higher quality, and with a greater degree of control than has historically been available from free-to-air broadcasters.

"Sky has been at the forefront of this development and has delivered substantial benefits to millions of consumers in the UK."

Delivery

"Pay TV services have to date been delivered primarily via satellite and cable networks," it added.

"However, this investigation comes at a time of disruptive change in the way content is distributed.

"For example, digital terrestrial TV offers the scope for pay TV to be delivered via aerials, and new broadband networks could offer consumers an unprecedented choice of content, and the ability to access that content on demand.

"The ability to provide such services depends not just on technology, but on access to content that consumers want to watch.

"Live high-quality sports and recent Hollywood movies retain an enduring appeal for many consumers.

"Access to this content has driven the historical development of pay TV, and we believe that it will remain crucially important for the development of new platforms and new services."