Sky ordered to cut sports prices – so will players pay the penalty?

Days of huge Premier League wages could be numbered after regulator tells Murdoch to charge his rivals less

Millions of fans could have easier and cheaper access to watching sport on television by as early as this autumn after the broadcasting regulator, Ofcom, yesterday ruled that BSkyB must reduce its wholesale prices by more than 20 per cent.

After a three-year investigation, Ofcom decreed that Sky Sports, which carries exclusive coverage of Premier League football, English cricket and domestic rugby union, be made available to rivals such as BT and Virgin Media for a monthly fee of £10.63 per subscriber. The current price is £13.88. With Top Up TV also keen on showing football, there will be more choice for viewers.

Ofcom decreed that BSkyB "exploits their market power", which "prevents fair competition and reduces consumer choice".

BSkyB and sports bodies responded angrily and may well launch a joint legal challenge. BSkyB will appeal the decision after initially applying to the Competition Appeal Tribunal for a stay on implementing Ofcom's ruling. Should that be refused, they will have to start the process of cutting prices immediately. That could mean the reduction coming into effect as early as August.

Sky said: "Ofcom's actions represent an unprecedented and unwarranted intervention," claiming that customers were already "well served with high levels of choice and innovation", and warning that "consumers will not benefit if regulators blunt incentives to invest and take risks".

The governing bodies of the affected sports were united in their condemnation, saying that it will cut the price of their television rights and that it will impact on the funding of grass-roots sport. BSkyB spent £944m last year on sports rights.

Richard Scudamore, the chief executive of the Premier League, described it as an "ill-judged and disproportionate intervention". He said: "We do not rule out a challenge to protect the interests of fans, clubs and the wider game." A Premier League statement added: "It will be harder to recruit and retain top talent."

The most aggressive response came from the Rugby Football Union. Francis Baron, the body's outgoing chief executive, said: "We believe this is little more than a confiscation of our rights by Ofcom dictat. We think it is grossly unfair and our lawyers are looking into it."

BSkyB's share price rose on the back of the Ofcom announcement as it was not as severe as some City analysts had feared. BSkyB has had exclusive rights to the Premier League since it was formed in 1992. Last year, it paid more than £1bn for a deal that runs to 2013.

How the ruling would change the playing field

Q. So what will this mean to me?

A. Ofcom's ruling is intended to give British viewers more opportunity to watch premium sport. The decision should free up customers who don't necessarily want to pay a monthly subscription for Sky's basic package as well, or those who want a bundled offer of television, phone and broadband from a rival. Several providers said they would price their products "aggressively".

Q. Who currently shows the channels?

A. Viewers can watch Sky Sports 1 and 2 by taking a Sky basic package and paying extra for the premium content. Virgin also offers different packages including the channels.

Q. Who will show the sports channels?

A. BT has been after the Premier League for a while, and sees it as a cornerstone to drive up the subscribers to BT Vision from 451,000 into the millions. Top Up TV is also interested. Virgin is looking at different pricing and bundling options.

Q. Why has the regulator targeted Sky?

A. BT, Virgin Media, Top Up TV and the now-collapsed Setanta Sports lobbied the regulator to break Sky's exclusive hold on premium sport and movies. The companies were desperate to get their hands on Premier League football, and Ofcom launched its investigation in March 2007.

Q. What is Sky's reaction?

A. It is fuming. The higher-than-expected wholesale price, and the resurrection of Picnic – a Sky initiative to replace its free channels on digital terrestrial platforms with a paid service – has not curbed the anger. Sky's CEO, Jeremy Darroch, said the regulator had got it "badly wrong".

Q. And its rivals' reaction?

A. Not as happy as some would have expected. Virgin Media's chief executive, Neil Berkett, said: "Some significant loopholes remain which provide an opportunity for Sky to further undermine competition." Gavin Patterson, the chief executive of BT Retail, said: "Ofcom should have gone much further than it did."

Q. How will this affect sports funding?

A. Darroch said it would drive down the value of television sports rights and reduce competition. The England and Wales Cricket Board said it was "greatly concerned" by the decision. Francis Baron, the head of the Rugby Football Union, said the process was "inadequate and flawed". BT and Virgin believe it will have little effect on the rights' value.

Q. Will this see Wayne Rooney move to Spain?

A. Rooney is unlikely to move, but should the Premier League rights sell more cheaply, it will have an effect on the quality of players in the league.

Q. What is the initial impact?

A. Sky is expected to lose about £25m on its initial annual hit, but the longer-term impact is less than obvious. Analysts believe it will have a drag on its customer base. All are expecting a price war.

Q. What happens now?

A. A huge legal battle is on its way. The most important initial hearing for Sky is at the Competition Appeal Tribunal (CAT), where it will lobby for a "stay of implementation", which would block the process. If denied, Sky will have to push through Ofcom's rulings as it potentially appeals to the CAT or the High Court. Several sporting bodies are also considering legal action.

Q. What is the political reaction?

A. The Conservatives have been silent so far. Ben Bradshaw, the culture secretary, has used the decision to go after them. Labour have long criticised the Tories for being too closely aligned with Rupert Murdoch, whose News Corporation holds the largest stake in BSkyB. Bradshaw demanded that his opposite number, Jeremy Hunt, make his party's position clear on the ruling. The Liberal Democrats backed Ofcom's ruling.

Nick Clark

Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Have you tried new the Independent Digital Edition apps?
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Kellie Bright as Linda Carter and Danny Dyer as Mick Carter

EastEnders Christmas specials are known for their shouty, over-the-top soap drama but tonight the show has done itself proud thanks to Danny Dyer.

Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
Life and Style
Arts and Entertainment
Call The Midwife: Miranda Hart as Chummy
tvCall the Midwife Christmas Special
Laura Trott and Jason Kenny are preparing for the Commonwealth Games in Glasgow
Arts and Entertainment
Sir Bruce Forsyth with Tess Daly in the BBC's Strictly Come Dancing Christmas Special
tvLouis Smith wins with 'Jingle Bells' quickstep on Strictly Come Dancing's Christmas Special
Arts and Entertainment
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Media

Ashdown Group: Brand Marketing Manager - Essex - £45,000 + £5000 car allowance

£40000 - £45000 per annum + car allowance: Ashdown Group: Senior Brand Manager...

Guru Careers: .NET Developer /.NET Software Developer

£26 - 35k (DOE): Guru Careers: We are seeking a .NET Developer /.NET Software ...

Guru Careers: Graduate Marketing Analyst / Online Marketing Exec (SEO / PPC)

£18 - 24k (DOE): Guru Careers: A Graduate Marketing Analyst / Online Marketing...

Guru Careers: Technical Operations Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: We are seeking a Technical Ope...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there