British Sky Broadcasting Group Plc, the U.K.’s biggest pay-television provider, won an appeal against a regulator’s decision forcing it to make its sports channels available to competitors at set wholesale prices.
Media regulator Ofcom “misinterpreted” evidence on BSkyB’s negotiations with rivals when it ordered the company in 2010 to ease access to the channels, which broadcast popular soccer games, the Competition Appeal Tribunal ruled today in London. Lawyers for BSkyB argued Ofcom’s decision was a “dramatic intervention” that treated FA Premier League matches like a “public good.”
“Ofcom’s core competition concern is unfounded,” the tribunal said in a public summary of its ruling. The watchdog’s findings regarding why BSkyB’s negotiations failed are “inconsistent with the evidence.” The full judgment was confidential and only given to the parties. The tribunal said it will hear further argument and hasn’t made a final ruling on what the regulator must do next.
BSkyB, controlled by Rupert Murdoch’s News Corp., agreed to pay 1.62 billion pounds ($2.54 billion) in 2009 to show most live Premier League soccer matches between 2010 and 2013. BSkyB, based in Isleworth, England, has a business model focused on showing exclusive sporting events and films, and Ofcom’s order forced access to its popular Sky Sports 1 and 2 channels.
“We are very surprised and disappointed with today’s decision by the Competition Appeal Tribunal, which we believe is contrary to the evidence and not in the interests of consumers,” Ofcom said in an e-mailed statement.
BSkyB said in an e-mail that it welcomed the ruling that Ofcom’s competition concerns were unfounded.
The company had argued Ofcom should be barred from setting prices for the soccer matches below the market rate, and that competition rules cited by the regulator don’t apply to the sports channels. Ofcom said BSkyB hurts consumers by charging competitors too much to broadcast the games.
After a three-year investigation, Ofcom said BSkyB was using its “market power” to limit distribution to rivals. While BSkyB appealed over claims Ofcom went too far, its competitors -- BT Group Plc, the biggest U.K. phone company, and cable-TV provider Virgin Media Inc. -- intervened in the case to say the regulator didn’t go far enough.
BSkyB in April 2010 reached a temporary deal with Virgin and BT, under which they agreed to put the difference between Ofcom’s mandated price and BSkyB’s higher price into an escrow account pending the result of the appeal.