Murdoch declares Sky is a power for competition in UK market
Saturday 03 November 2007
Rupert Murdoch has launched a broadside against Sky's detractors, arguing that the pay-television company has helped create competition in its key markets and that consumers have more power than ever before.
Sky has been widely criticised over the past year following its controversial acquisition of a large stake in ITV, a move the Competition Commission has ruled was against the public interest as it restricted competition. It has also had to navigate its way through a series of regulatory inquiries related to its dominance in the pay-TV market, most recently defending its plans to launch subscription services on the Freeview platform after regulators said the move could harm consumer choice.
Although Mr Murdoch did not specifically address the various regulatory threats facing the group at Sky's annual meeting, the company's chairman made a series of pointed remarks aimed at highlighting the need for competition in the sector.
"For Sky, competition is not simply a fact of life to be tolerated. We relish competition and help to create it. We compete vigorously, responsibly and fairly. Above all, competition is great for consumers. History has shown that it is competition and free markets which deliver real, sustainable value. This is something we should encourage and celebrate more here in the UK. I see no reason to be fearful of allowing choice and innovation to flourish even more freely in the years ahead," Mr Murdoch said.
Whether regulators respond to Mr Murdoch's plea to allow Sky to retain control over its own destiny remains to be seen, with the Competition Commission set to send its findings over the ITV stake consultation to John Hutton, the Secretary of State of the Department for Business, Enterprise and Regulatory Reform, by early December.
Mr Murdoch said consumers have more power than ever. "The good news for companies like Sky is that consumers are taking charge. People everywhere will soon have the power to access a virtually unlimited wealth of information, to choose what they want from it, to share it, to add to it and to create new communities that transcend old boundaries. No doubt this will be painful for some. It will threaten businesses that fail to adapt," he said.
Mr Murdoch also castigated those who questioned the pay-TV company's move into the broadband market for "missing an important point" after the company surged through the 1 million-customer mark earlier this week, making it the fastest growing internet supplier in the UK. He said that nearly 40 per cent of its broadband customers are new Sky users, bolstering its subscriber growth figures in the first half of its financial year.
However stronger than expected growth in the number of customers taking the Sky+ box, the group's subsidised personal video recorder, put a slight dent in its profitability over the period with operating profit of £150m about £15m lower than analysts had pencilled in. The shares fell by 4.35 per cent.
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