Sky Sports 1 and Sky Sports 2 have been deemed too expensive and have been asked to cut their prices by the media regulator, OFCOM. However, Sky isn’t very happy with this forceful move by the regulator.
The chief executive of BSkyB, finds OFCOM’s findings as ‘extraordinary,’ and insisted that they want to ‘appeal against the decision via the courts.’ On the other hand, OFCOM has previously warned Sky about its prices, largely because Sky holds the majority of rights to key sporting events, such as The Ashes, the US Open Tennis and FA Premier League football. They insist that today’s ruling will make Sky Sports more available now to nearly ten million new customers.
However, the regulator stopped short of price cuts in Sky’s varied selection of movie channels, which has angered some of BSkyB’s closest competitors, like BT and Virgin Media. If a move is agreed to cut the price of Sky Sports to the normal customer, Sky will be allowed to bring some of their pay-TV channels like Sky1 to Freeview, which had been agreed over two years ago, until Virgin Media’s buyout of ntl: telewest. The broadcaster now has six weeks to outline a template contract to other pay TV providers, with OFCOM set to make a final announcement before the World Cup finals this summer.
Sky is the largest operator in the pay-TV market at the moment, with nearly ten million subscribers. Under the new proposal, OFCOM has suggested the Sky Sports 1 and Sky Sports 2 shall be made available for a price of £10.63 per subscriber, whereas the current subscriber would be paying £17.14, a reduction of over 10%. This news comes after a three-year investigation, in which OFCOM has denied claims of foul play tactics and everywhere was done on a ‘fair and square basis.’
Virgin Media, BT and the normal or new subscriber are the main winners and Sky the losers, as they have already insisted of their intentions to appeal against the decision. The bidding war involving pay-TV prices has certainly well and truly begun.
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