Ofcom ready to rein in Sky as rivals prepare price cuts
January 19, 2010
A board meeting at Ofcom is set to approve the regulator obliging Sky to cut its wholesale prices on its sports channels. In choreographed weekend interviews BT set the ground claiming it would definitely significantly undercut Sky with its retail price if it gets access to the channels at the kind of prices put forward by Ofcom.
BT's head of retail division Gavin Patterson said it hopes to start offering Sky Sports 1 to customers of its BT Vision service for £15 (E17) a month. Sky customers currently pay at least £25.50 for the channel and most satellite households are paying upwards of £36 a month for a full package of sports and premium movie channels. “The case is crystal clear â€“ the customer benefits if they get more choice,” said Patterson. BT Vision doesn't currently carry Sky Sports and has amassed just 436,000 subs.
In its initial findings, Ofcom decided Sky must be forced to drop the price of Sky Sports 1 and Sky Sports 2 from the £13.48 it currently charges Virgin Media to somewhere within the range of £9.41 and £11.24 per channel, while a bundle of both channels and Sky Movies â€“ which currently costs Virgin £23.40 per subscriber â€“ should come down to between £16.98 and £20.43, a 27 per cent discount on current prices.
Sky is likely to fight these enforced cuts through the courts, just as it has fought the Competition Commission's decision it must sell its stake in ITV.