Sky will fight Ofcom over premium TV

300 pound gorilla? Us?
300 pound gorilla? Us?

Sky will use "all available legal avenues" to fight Ofcom's recommended changes to the way in which premium content like sport and movies are sold to competitors.

An Ofcom report into Pay TV was damning of Sky's motivations in selling on its premium content like the Premier League football and Hollywood movies, suggesting that it was deliberately over-pricing wholesale packages to other platforms such as cable and IPTV services.

However, Sky fundamentally disagrees with the findings, and will fight tooth and nail to ensure that Ofcom does not intervene in the market by setting prices or influencing the distribution of rights.

Disagree fundamentally

"We disagree fundamentally with Ofcom's approach, analysis and conclusions," a spokesman told TechRadar.

"In light of Ofcom's determination to pursue its preferred outcome, we will use all available legal avenues to challenge this unwarranted intervention."

Ofcom's strident comments are not unexpected, but there are many that have already indicated some of the problems with its comments.

Some commentators have pointed out that Sky bids in a open market for all of its premium content and the likes of BT – one of Sky's most open critics – has the kind of financial weight to invest in such content itself should it so desire.

Secondly, as the Telegraph's Damien Reece suggests: "If companies aren't allowed economic control of their own assets, that's hardly conducive to investment. It's one thing to price regulate former state monopolies, such as energy companies, quite another private enterprises."

UPDATE: Sky's chief executive Jeremy Darroch has responded saying:

"Sky invests and takes risks to create television channels of the highest quality. We spend over £1 billion a year so viewers can enjoy the movies and sports coverage they expect. In doing so, we have increased choice for consumers, raised standards across the industry and provided much-needed support for UK sport.

"We want our premium channels to be widely available on other platforms. But we deserve a fair return on the investments which create so much value for other distributors and their customers.

"Forcing Sky to sell its channels for less than their true value is a subsidy for companies that have shown no appetite for investment in programmes.

"BT and Virgin Media do not deserve to be handed a reward at Sky's expense for their repeated failure to invest. It defies belief that Ofcom expects Sky to lower its wholesale prices to compensate for the higher costs of less efficient platforms.

"Ofcom is proposing an unprecedented level of interference in commercial markets. Good regulation does not involve micro-management. Nor does it mean tinkering to re-shape 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.

"This country needs more companies which innovate for consumers and invest for the long term. Consumers will not benefit if regulators are allowed to intervene to limit the legitimate rewards and opportunities available to successful companies.

"Punishing success has a chilling effect on incentives for investment and undermines the attractiveness of the UK as a place to do business."

Patrick Goss

Patrick Goss is the ex-Editor in Chief of TechRadar. Patrick was a passionate and experienced journalist, and he has been lucky enough to work on some of the finest online properties on the planet, building audiences everywhere and establishing himself at the forefront of digital content.  After a long stint as the boss at TechRadar, Patrick has now moved on to a role with Apple, where he is the Managing Editor for the App Store in the UK.