On 15 April 2010, the Premier League issued a statement confirming that it will lodge an appeal against Ofcom's final decision in its pay TV review. This was followed shortly after by an application by Sky on 16 April to suspend Ofcom's decision, pending the resolution of its own appeal which will be filed shortly.
Ofcom's final decision in its pay TV review was announced on 31 March 2010. Ofcom is requiring Sky to offer its Sky Sports 1 and Sky Sports 2 channels to pay TV retailers on other platforms at a wholesale price that is 10.5% below the current bundled price for cable retailers - and 23.4% below the current standalone price.
The Premier League's statement states that:
"By forcing Sky to sell its sports channels to its competitors at a discount, Ofcom will reduce the incentive of all broadcasters, Sky included, to invest in the acquisition of sports rights. This can only have a negative impact on the ability of sport to attract a fair return on its content in an open market, which is necessary to ensure appropriate investment in maintaining the highest quality of that content."
The thrust of the Premier League's argument is that pay TV operators are unlikely to bid for sports rights if they can acquire them on a wholesale basis from Sky at a reduced price – and less bidders will mean less competition for the rights and therefore lower bids.
Ofcom's pay TV review has been a long running saga. The review was launched in March 2007 following the receipt of submissions from BT, Setanta, Top Up TV and Virgin Media, asking Ofcom to make a market investigation reference to the Competition Commission in relation to the pay TV market.
Ofcom published for consultation its initial assessment of the pay TV market in December 2007. This set out Ofcom's initial views on the main characteristics of the market and some possible competition concerns.
This was followed by a second consultation in September 2008, which identified some particular concerns relating to access to premium content (sports and movies) and some possible remedies. It also consulted on Ofcom's proposal that, instead of making a market investigation reference to the Competition Commission, it would deal with concerns over access to content by putting in place a wholesale must-offer condition using its sectoral competition powers under the Communications Act 2003.
The specific power under the Communications Act is set out in section 316, which allows Ofcom to take action to ensure fair and effective competition in the provision of licensed services. Under section 317of the Communications Act, any person affected by the exercise of this power can appeal to the Competition Appeal Tribunal. The appeal is a full merits based appeal – and so is effectively a rehearing of the case.
In view of the decisions of the Premier League and Sky to appeal to the Competition Appeal Tribunal, it looks like this saga will continue to run for some time.
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