Advanced Television

OFT examines Kangaroo

May 1, 2008

The UK Office of Fair Trading (OFT) has flagged up potential competition concerns with Kangaroo, the on-demand service planned by the BBC, ITV and Channel 4. The watchdog is inviting interested parties to comment on the venture and is asking for submissions by May 14. It will then consider whether it has grounds to refer Kangaroo to the Competition Commission for investigation.

Kangaroo is a joint venture between the BBC’s commercial division, BBC Worldwide, ITV and Channel 4. It aims to be a shop window for the three broadcasters’ programming, allowing viewers to download digital versions of shows, either for purchase or on an advertising-funded model.

The service will initially be available via the web, with shows available either streamed or to download. However, the ultimate aim is to deliver Kangaroo content direct to televisions. By pooling the resources of the UK’s three leading terrestrial broadcasters, Kangaroo poses a potential threat to Virgin Media, which increasingly sells itself as an on-demand operator, and BSkyB, which also offers on-demand through broadband and the Sky+ box.

One point of controversy for the OFT to investigate is likely to be the relationship between Kangaroo, a commercial enterprise, and the BBC’s publicly funded iPlayer, a highly successful on-demand catch-up service.

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Sky subs base swells, ITV hurts

BSkyB added 56,000 new customers in the first quarter of 2008 to take its customer base to nearly 9 million. It now has a total of 8,888,000 pay-TV customers in the UK and Ireland, keeping it on track to hit its target 10 million by 2010. The company also said that it had signed up another 262,000 customers to its personal video recorder service Sky+, putting it in 3,393,000 households, or 38 per cent of its overall base. Churn marked a four-year low at 10.5 per cent.

Sky Broadband customer numbers were up 229,000 to reach 1,428,000 at the end of March. The company aims to have 3 million broadband customers, or 30 per cent of its subscriber base, by 2010. Sky said it added 43,000 high-definition subscribers, taking its tally to 465,000 at the end of March. Its Sky Talk telephone business grew by 180,000 to 1,095,000.

The growth in each segment helped ARPU to £424 (E530) ahead of forecasts.

However, financial results were hit by write-downs on the ITV investment. Revenues for the quarter of rose to £1.25 billion from £1.2 billion for the same period in 2007, but after further impairments on its 18 per cent ITV stake, pre-tax profit fell from £200 million to £56 million and the company recorded a loss after tax of £6 million. For the nine months to March 31, the overall impairment charge of £474 million on the ITV investment meant a pre-tax loss of £118 million compared with a profit of £388 million in 2006-07, but that disguised a 10 per cent increase in revenues.


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