OFT unties cable TV supply row
Monday 14 August 1995
Earier this year, three cable companies - Bell Cablemedia, Videotron and International CableTel - complained to the OFT about long-term supply contracts that had been signed between BSkyB, 40 per cent owned by Rupert Murdoch's News Corporation, and the two leading cable operators, Telewest and Nynex CableComms. Other media companies were believed to have supported the complaint.
Under the contracts, the two cable companies would receive guaranteed supply of Sky television programming for broadcast on their networks, in return for agreeing not to finance so-called "cable-exclusive" programming that might compete with BSkyB's own offerings.
At the same time, the dissident cable operators expressed concern over BSkyB's rate card for programming supplied to cable companies that did not sign long-term agreements.
The OFT ruled in June that the contracts contained clauses that were "anti-competitive." The regulator also said it would review a revised rate card, developed by BSkyB, that aimed to accommodate criticisms levied by the cable industry.
While the OFT declined to specify the offending clauses, the Independent has reported that two items, covering pay-per-view sports and film programming, had attracted the OFT's attention.
A Sky insider, speaking on condition of anonymity, confirmed late last week that the two clauses had been watered down, and expressed confidence that the OFT would accept the revised terms.
Eugene Connell, chief executive of Nynex CableComms, said he was "highly satisfied that the terms of the revised agreement were in the best interests of Nynex".
The revised rate card was also believed to be broadly acceptable to the OFT, and an announcement allowing BSkyB to apply the new charges is also likely within the next week to 10 days. BSkyB has agreed not to impose the conditions of the existing agreements.
The complaining cable companies had hoped that a change in the contract terms might encourage Nynex and Telewest to resume their involvement in a plan to develop cable-exclusive programming for sports and film. Both companies withdrew their support upon signing the controversial agreements in May. But Nynex's Mr Connell said his company would not rejoin the cable-exclusive programming initiative, despite the changed terms of the BSkyB agreements.
Telewest has indicated it has no intention of again backing the film and sports programming under development by the cable industry.
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