Competition fears hit Kangaroo

Britain’s competition watchdog has delivered a potentially fatal blow to “Project Kangaroo,” the video-on-demand venture from the BBC, ITV and Channel 4, indicating the platform would be bad for competition.

The Competition Commission delivered a damning verdict for the project in its provisional findings yesterday following a five-month inquiry, saying Kangaroo would “restrict competition in the supply of video on demand services in the UK”. The regulator suggested a series of potential remedies, but said “prohibition would also be an option”.

The decision comes shortly after the project was rocked by the departure of Ashley Highfield, who quit as chief executive after just four months.

BBC Worldwide, ITV and Channel 4 announced plans last year for a shared on-demand service called UK Video on Demand (codenamed Kangaroo).

The commission fears the service would create a substantial lessening of competition of video on demand in the UK, although it did not think online advertising or content acquisition competition would suffer.

Peter Freeman, the chairman of the commission, who headed the inquiry, said: “We are concerned a loss of rivalry between BBC Worldwide, ITV and Channel 4, who are normally regarded as close competitors, could restrict existing and future competition for video on demand.”

The three companies developing Kangaroo said in a statement yesterday they would “continue to make the case for a service that will be both in vast majority free and non-exclusive and of great benefit and value to British consumers”.