Sky forced to cut charges

Ofcom has told Sky to offer its sports channels for 23% less...

10:55 31 March 2010

Broadcasting regulator Ofcom has told Sky that it must cut the price that it charges its rival cable, terrestrial and internet outlets to show its premium sports channels.

After a three year inquiry, it has been revealed that the broadcaster will have to sell Sky Sports 1 and 2 for up to 23% less than the current wholesale price.

The drive aims to offer viewers more choice of pay-TV services.

Sky said it would appeal against the "unwarranted intervention", and reasoned that it would have a negative effect on the consumers.

Sky issued a statement declaring: "This is a marketplace where customers are well served with high levels of choice and innovation.

"Consumers will not benefit if regulators blunt incentives to invest and take risks."

Sky will have to sell Sky Sports 1 and 2 for £10.63 a month each - 23.4% less than at present. If the two channels are bundled together, Ofcom has set a price of £17.14 - a discount of 10.5% on current wholesale charges.

However, the move may not just resonate in the broadcasting world. Bodies which represent rugby, football and cricket - which rely on their lucrative TV rights deals - fear the proposals will mean less money going into sport as a whole.

BT said it hoped to offer Sky Sports 1 and 2 cheaper than Sky during the next football season.

But it added: "Ofcom should have gone much further than it did.

"They should have included all Sky Sports channels, not just two. The wholesale price for the two sports channels is higher than the regulator had previously suggested."

Ofcom's inquiry began in 2007 after BT, Virgin, Top Up TV and Setanta (who recently folded), expressed concerns about Sky's dominance over the pay-TV industry. Sky holds an estimated 85% of the market.