Sticky wicket 

31 March 2010

Ofcom: Delivering consumer benefits in Pay TV

Ofcom orders Sky Sports price cut

Football, cricket and rugby fans make up the core of BSkyB’s pay-TV business, and their willingness to pay good money in exchange for in-depth coverage of their favourite teams represents the entire foundation of BSkyB’s pay-TV model as built up over many years; the latter being Sky’s main excuse against change, regardless of any monopoly issues.

Therefore Ofcom’s initially innocent-sounding “Delivering consumer benefit in Pay TV” conclusion is indeed an attempted stab made to BSkyB’s heart, even if it actually misses by a few inches.

Ironically it would have been more beneficial to Sky if this very judgment had been made ten years ago – and in turn exposes the lack of any political willingness to tackle what was an obvious and growing problem in the interim – although the runaway success of Premiership football teams would have been tempered somewhat as a consequence.

Success at the top level of the game has, however, come at a sometimes devastating cost for some of the lower division clubs, such as Portsmouth FC going into receivership, even if other sports such as cricket and rugby have arguably yet to feel the full potential effects of such an imbalance.

Therefore any fundamental changes to the way BSkyB conducts its business will certainly have consequential effects in the sporting world, but not all of these changes will be as negative as Sky would like you to believe.

Any risk-taking made in relation to pay-TV sport actually ceased years ago when BSkyB successfully proved that there was a good market for specialist coverage of team games in particular; BSkyB’s only real advantage was that its coverage wasn’t as constrained as most rivals as well as holding a sporting rights monopoly for many years.

Of course whether or not any change(s) will actually happen may also depend on the result of the next general election, although the European Parliament could also influence the final outcome as well. In the meantime expect a protracted period of legal wrangling and uncertainty.

A future Conservative government will undoubtedly see the demise of Ofcom, although such a change will also be linked to the fact that it is perceived to be a Government ‘quango’ full of New Labour ‘friends’; it’s certainly true that key Ofcom figures such as Ed Richards do at least have past connections with certain key government ministers.

BSkyB will defend its profit margin and core subscriber base first and foremost; any reduction in income will be primarily felt by sporting bodies that have become accustomed to large pay cheques, therefore it will be interesting to see what will happen to many of these wealthy clubs and their players as a consequence.

You Say

1 response to this article

Russ J Graham 4 April 2010 at 9:00 am

There have been numerous occasions where the government and the regulators could have reined in the Murdochs, but they’ve always ducked the issue out of fear of the power of their newspapers.

The only time it wasn’t ducked was when Rupert Murdoch took over at LWT and the IBA pushed him out almost immediately. Ironically, that was the one opportunity to have him inside the tent pissing out and his exit from LWT was what put him in the current position of being outside the tent pissing in.

This attempt by OfGums is too little too late. The Murdochs have been ignoring OfGums since it was created and have no reason to obey when the parties won’t move to enforce the regulator this side of an election and the frightful Tories, once back in Downing Street on May 7, won’t want to enforce anything against any business interest. A swing and a miss by OfCom yet again.

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