Clash over Disney agreement

The Office of Fair Trading and two pay-TV companies, Disney and the broadcaster BSkyB, clashed yesterday over the implications of a revised distribution agreement governing the supply of the Disney Channel to cable operators.

Following a report in the Independent yesterday, detailing an OFT ruling on the supply of the Disney family entertainment channel, Disney and BSkyB insisted that cable operators would not be able to offer the channel as a stand-alone pay service, despite indications to the contrary from the OFT.

The companies said that any cable company carrying one or both of Sky's movie channels would be supplied the Disney Channel as a bonus.

Although the companies agreed to end the "exclusive" agreement between them, allowing cable companies to deal directly with Disney, they insisted last night that the channel would still be packaged with Sky's movie services.

In a statement, Disney said: "This approach was chosen to establish the channel as a premium service offering top quality family intertainment."

The companies added that under the revised agreement, the handful of cable companies now offering only one movie channel would also be supplied with Disney on terms to be negotiated directly with Disney. In the past, both premium channels had to be carried in order to receive the family channel as a bonus.

The OFT had moved to end the exclusive agreement between Disney and BSkyB, and had targeted the "bundling" of channels as being uncompetitive.

A spokesman said yesterday the office would seek clarification of the bundling issues.

"BSkyB and Disney knew what our understanding of the issues were, and they should take it up with us if there is any misunderstanding," an OFT spokesman said. He added that the office would continue to monitor the operation of the new arrangements.

Cable operators conceded yesterday that the implications of the revised agreements were still unclear. "Until I sit down with Disney next week, I won't know whether the terms will be any different when I deal with Disney as when I deal with Sky," a cable executive said. "I don't know if I am still going to have to bundle the services."

BSkyB agreed last March to unbundle the sale of its own Sky channels to cable companies, at the request of the OFT.

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