Jeremy Warner: Sky in the spotlight as Setanta teeters
Wednesday 10 June 2009
Outlook Ofcom's efforts to force BSkyB to make its sport and other premium content available to rival pay TV providers on a wholesale basis have been so long drawn out that whatever the eventual outcome, it will come too late to save Setanta, the sports broadcaster which is threatening to collapse into administration under a mountain of unpaid bills. Setanta stopped taking new subscriptions yesterday. Not that there were many anyway, but it would seem to be the beginning of the end.
Don't get me wrong. I'm not blaming Sky for Setanta's demise. The rival pay TV service is largely the author of its own misfortune. As Jeremy Darroch, BSkyB's chief executive, pointed out yesterday, it is not part of Sky's job to support its rivals. Setanta took on too much cost too quickly, it's got impatient shareholders unwilling to give the company the time necessary to build the supporting subscription base, it's not been brilliantly managed, and it has been badly hit by the credit crunch and recession.
Yet the fact remains that Setanta and all the other pretenders to the pay TV throne – Virgin Media, BT Vision and Top Up TV – would have stood more of a fighting chance had better progress been made towards breaking Sky's monopoly on premium content. To Sky, the idea of being forced to make its crown jewels available to rivals on a wholesale basis – or put another way, at Sky's retail price minus something – has always been anathema, and it has fought all such attempts tooth and nail.
BT Vision's chief executive, Dan Marks, yesterday quit in apparent frustration at the lack of progress. I'm suspicious of conspiracy theories, so until presented with evidence to the contrary, I'm not minded to believe this is further proof of Rupert Murdoch's continued influence on the Government. But whatever the reason, Ofcom's deliberations do seem to be taking an inordinately long period of time. The regulator appears curiously reluctant to reach a determination.
In this regard, the demise of Setanta, the only real rival to Sky in broadcasting Premier League football, is not as obviously good news for Sky as it might seem. Forcing the Football Association to split the rights has quite plainly failed in its purpose of providing worthwhile competition to Sky. Indeed, it might even have been harmful to consumers in that to get access to all Premier League TV, viewers have had to pay twice, once for Sky and once to Setanta. Previously it was just Sky.
Having failed to make headway with this approach, the next port of call is to force Sky to wholesale its monopoly at a regulated price. This is the approach used in the US to generate competition in pay TV and it works well. Sky will continue to take obstructive action and regulators will no doubt continue for a while longer with their tortuous deliberations. They blame their tardiness on fear of Sky's formidable legal arsenal. Whatever they say will be challenged, so they must be careful to make it legally bombproof. But one day it will happen – unless you believe the conspiracy theorists.
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