DIGITAL REVOLUTION : Who really won the battle?
Wednesday 25 June 1997
BDB were whooping it up yesterday. They couldn't believe their luck - all this and no Murdoch, now the ITC has cleverly removed him directly from the bid. All the equity is theirs and they still have the Sky channels that helped them win. The ITC was plainly convinced by Murdoch's oft-repeated maxim that only his dominant sports and movies can act as the "battering ram" to force viewers to buy into new technology. "A miracle result!" enthused one leading BDB player. It never occured to them, they said, that the ITC would do anything as imaginative as throwing Murdoch out of the bid, while keeping his channels.
Is Murdoch down-hearted? No doubt he would like to have had a one-third control over digital terrestial: he has always wanted a foothold in terrestial television. On the other hand, he now has to put up no money and yet his ready-made channels will still take out 70 per cent of the revenues. Not bad.
What's more, access to digital television for both satellite and terrestial will still go through his set-top box, and all subscribers for pay-TV will still be managed by his subscriber management system. He will still control the electronic programme guide, which decides how easy it is for viewers to access what they want. Will they be unfairly pushed towards watching Sky instead of, say, the BBC? Oftel, the regulator, is confident fair access can be guaranteed. But BSkyB and BT will be providing the key interactive services, which smacks of monoply too.
Murdoch will still cast a threatening shadow. His channels will now be on cable, satellite and terrestial. Who will have the money to bid against him for premier sports and movie rights? BDB claim there is no reason why they should not, but other seasoned observers note that Murdoch usually has "No-compete" clauses, or secret understandings in his contracts. At an off-the-record occasion recently, a leading BDB player said there would be no "head-on" competition with Sky for these rights.
About this, Oftel is plainly alarmed. In an extraordinary attack on the ITC, its fellow regulator, Don Cruikshank, the Oftel Director General, fired off a warning statement yesterday raising grave doubts about BDB: "The participation of BSkyB... as a long-term supplier of certain pay- TV services, in particular sports programming, raises substantial competition concerns."
Prodded by the Government, the ITC was bold in ejecting Murdoch from a share in ownership. The question now is whether Oftel is right in fearing his market dominance none the less.
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