Virgin and BT join forces in BSkyB attack
Virgin Media and BT have hit out at BSkyB’s pricing mechanism for its premium channels, saying that its “near monopoly” restricts consumer choice and keeps prices high.
The attack came in a joint submission to Ofcom, which is consulting over its proposals to control the wholesale pay-TV market, that would mean BSkyB having to sell its sports and movies channels to other providers at a regulated price.
The two media and telecoms companies, plus Freeview provider Top-Up TV, said that they support planned pricing rules which will “result in lower retail prices for pay-TV, more choice for consumers and greater innovation” in the industry.
“The current market failure makes it impossible for alternative suppliers to compete effectively with Sky,” the submission said.
Sky has rejected the proposals, which its chief executive Jeremy Darroch has said could see it lose around £700m over four years.
Virgin and BT – led by chief executives Neil Berkett and Ian Livingston respectively – believe that the new pricing rules would lead to prices for Sky’s premium channels dropping by up to 20 per cent.
Virgin can currently provide Sky channels to its customers, but has to pay Sky a premium and says it loses money in the process.
Last month, Ofcom chief executive Ed Richards rejected proposals from Sky to lower the price at which it wholesales its channels, and the watchdog is said to be seeking even larger discounts.
A final statement is expected from the regulator early next year. Sky is highly likely to appeal if Ofcom decides to push forward with the plans.