Legal battle looms as Ofcom prepares to force Sky to sell channels

LONDON - Ofcom is likely to force satellite broadcaster BSkyB to sell its sports and film channels at a wholesale fixed price to its rivals within the month.

Legal battle could be in the offing
Legal battle could be in the offing

Industry sources expect the satellite broadcaster to receive a ‘wholesale must-offer’ obligation that would force Sky to make its premium content available to all interested parties, including Virgin Media and BT Vision.

If passed, the cost of watching live football, rugby, boxing and cricket on TV is set to fall in the UK, as it would bring an end to Sky’s dominant position, built since 1989 under Rupert Murdoch.

At present, most operators are unable to agree terms with Sky over its premium content, and those that have, most notably Virgin Media, have complained that they are charged rates which make it impossible for them to compete effectively.

The media regulator confirmed it does intend to publish the findings of its pay-TV investigation in March, but refused to be drawn on any speculation.

Any decision has come too late for Setanta, whose British business collapsed last June following a six-month struggle to raise cash.

The TV operator, which counted Premier League football matches among its offering, was among the original broadcasters to request Ofcom to lead an investigation into the pay-TV industry back in July 2007, alongside BT, Top TV Europe and Virgin Media.

But Ofcom’s ruling is still eagerly awaited by broadcasters operating in the satellite and cable sector.

Other interested parties in this month’s decision include sports and film rights holders whose businesses rely in significant part on fees received for their rights from pay-TV operators.

However, any ruling this month could still fail to provide any immediate action. Alex Haffner, senior associate at competition law firm Denton Wilde Sapte, warns a resolution could still be some two years away.

He said: "The next stage in the battle will inevitably be legal appeals with Sky seeking first to have the Ofcom decision suspended pending a full appeal on the merits of the decision."

Haffner, who has previously acted for rights holders FA Premier League and ECB, in addition to broadcasters ITV Digital and BBC, warned a typical Competition Appeal Tribunal takes between 1-2 years to complete.

He added: "Passions are running high on both sides of the fence. The way Ofcom writes this month’s decision will be key to whether it can effectively neutralise the current arguments."

Sky was unavailable to comment.

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