Wherever the Office of Fair Trading treads these days, conspiracy
theory is bound to follow. And the OFT has been particularly busy in
recent months. Not content with looking at consolidation in the cable
industry and at the possible implications of a Carlton merger with
United News and Media, the OFT announced last week that it is to look at
BSkyB’s overall position in pay television.
So what does this mean? There are two theories in play here - one pro
Rupert Murdoch, the other anti - and each has been sustained by some
gentle spin doctoring over the past week. Theory one is that it is to do
with Murdoch’s anger at the news of a possible Carlton-United deal and
rumours that the deal had already been given tacit government
Murdoch has always been hobbled, particularly when it comes to
involvement in terrestrial broadcasting, by rules on concentration of
ownership. Why should others be treated differently? This, according to
the theory, is the Government’s way of mollifying Murdoch. If the OFT is
to recommend liberalisation in the terrestrial market, it might be
disposed to do the same in pay TV.
Indeed, John Bridgeman, the OFT’s director-general, said that
liberalisation was very much on his mind: ’Our approach is from the
perspective that regulation should be kept to the minimum necessary to
promote competition.’ In other words, BSkyB could now be free to be far
more aggressive in its dealings with cable and with its digital rival,
Not so, say sources within cable companies. They favour conspiracy
theory number two. This holds that the OFT is embarrassed at having
interfered in the agreed - and perfectly reasonable - merger between NTL
and the cable division of Cable and Wireless. So to redress the balance
it is turning up the heat under Murdoch too. The outcome is likely to be
more restrictions on the way Sky sells its programming.
Who’s likely to be right? There is, of course, a third possibility - the
more the OFT digs, the more it realises just how much more digging needs
to be done. That might be the most worrying of all. While US companies
are busily reinventing an industry fit for a new century, Britain
manages to agonise over the peeling of some very small potatoes indeed.
Is the OFT’s busy spell further evidence that we’re likely to be left
behind as the Time Warner-AOL era dawns?
Graham Duff, the chief executive of Zenith Media, says that it doesn’t
make sense to investigate the media market piecemeal: ’You can’t look at
any of this in isolation. The ability to step back is an important part
of our job - we have to ensure that the very best and most relevant
advertising opportunities are available to our clients. But that’s a
question that cuts right across all of the OFT’s investigations. It’s
difficult to take a view on the way the broadcast market as a whole is
likely to evolve. I don’t know how the OFT intends to do that.’
Paul Longhurst, the managing director of Quantum New Media Services,
agrees. He says: ’All of this OFT activity obviously brings home to
everyone the interconnectedness of the market. But you could argue that
it makes it all the more probable that we’re likely to see increasingly
broadbased strategic partnerships.’
Longhurst is more convinced than ever that regulators need to see the
overall situation. ’Sometimes the participants lack the big picture too.
Cable companies may want to have checks placed on the power of Sky when
it comes to programming, but you could also argue that cable companies
should be forced to open up their networks to internet providers - and
the cable companies might not be so keen on that because they’ve
invested a lot in building their own interactive services.
’But the main worry is that a lot of unnecessary bureaucracy stifles
progress. I wish regulators would understand the international
But I’m convinced that, at the very least, the domestic market should
come under a single microscope,’ Longhurst says.