Richard Branson wrote a stiff article in last week’s Financial Times regarding BSkyB’s iron grip on premium content, accusing the broadcaster of muscling competitors out of the market.
Branson says: "Sky owns the vast majority of the ‘premium’ pay-TV channels, showing among other things Premier League football and first-run Hollywood movies, but it only sells these channels to other pay-TV operators selectively and at very high prices. This restricts competition and helps drive the relentless growth of Sky’s own satellite platform.
"As a result, Sky now accounts for some 85 per cent of all premium pay-TV subscribers – a level of concentration that, in any market, would attract the attention of even the most laisser faire regulator. This grip on the retail market, in turn, means it is commercial suicide for any would-be pay-TV retailer to try to outbid Sky for key content such as football rights, as ITV Digital and then Setanta found out to their cost. This vicious circle is preventing companies competing effectively with Sky."
The Virgin billionaire called on Offcom to enforce competition laws to ensure that Sky sells its premium content to other channels at reasonable prices, rather than the inflated costs charged at present.
Branson explains: "This would be an excellent result for consumers because it will enable each pay-TV operator to compete based on its different strengths. Services will be developed that appeal more closely to the preferences of different customers.
"For instance, those who do not want, or cannot have, a satellite dish will not need one. Those who do not wish to commit to a 12-month subscription but are willing to pay for some TV channels will be more readily able to do so. Those who do not want sports or movies “bundled” with dozens of other basic channels will find it easier and cheaper to buy premium channels on a standalone basis."
Branson concludes: "If Ofcom follows through on its proposals, it will herald a new dawn of more choice, lower prices and greater innovation for pay-TV consumers in the UK."
Read the full article on the Financial Times website.
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