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BSkyB wins appeal against Wholesale Offer. What next for Premium Sport on Digital Terrestrial TV?

BSkyB has today won its appeal against Ofcom's decision to enforce wholesale pricing of Sky Sports 1 and 2.

The Competition Appeal Tribunal (CAT) ruled that Ofcom's concern about the way Sky sold its sports channels on a wholesale basis was "unfounded".

In March 2010, Ofcom forced Sky to offer its main two sports channels at a low cost wholesale price to competitors in a process called "Wholesale Must Offer". As a result BT brought Sky Sports 1 and 2 on to the digital terrestrial television network and offered the channels to its BT Vision customers. Top Up TV, the incumbent pay TV operator on digital terrestrial, also gained access to these channels although ultimately distributed by BT.

In return for offering its sports channels to its competitors in a "Wholesale Must Offer" arrangement, Ofcom gave Sky the green light to launch "Picnic", a pay TV service on digital terrestrial television replacing its Freeview channels including Sky News. The service never went ahead, and the satellite broadcaster is now pursuing an IPTV delivered service called "Now TV" that will ultimately offer all of Sky's channels via broadband.

Although Ofcom is now reportedly looking to address the issues raised by today's ruling, the end of the current arrangement could prove to be disastrous for Top Up TV, who have mostly ditched their previous on-demand "Anytime" service delivered overnight via the digital terrestrial television network  in favour of a premium sports channel add-on service for Freeview households. The Sky Sports service constitutes a core element of that service.

Responding to today's ruling, Sky said in a statement: "We welcome the CAT's confirmation that Ofcom's competition concerns in relation to the wholesale supply of Sky Sports are unfounded and that, contrary to Ofcom's analysis, the evidence shows that Sky has engaged constructively with other distributors over the supply of its premium channels. This finding supports the argument that Sky has been making consistently over the last five years."

Back in 2010, Top Up TV claimed the opposite, stating "Top Up TV has been denied wholesale access to Sky's premium channels (under any terms) for almost five years".

Today's ruling may also have an affect on negotiations between BT and Sky for carriage of each other's sports content. So far, BT is the only major pay TV player that doesn't have an agreement to carry all of Sky Sports channels on its network. It has previously only carried the first two Sky Sports channels that were covered in Ofcom's Wholesale Must Offer ruling, and only on digital terrestrial - not its own network. Sky is also eager to be able to offer its customers BT's Premiership football matches from next year. Any deal would likely involve distribution via BT's own network, leaving those reliant on digital terrestrial television provision of Sky Sports out in the cold.

TalkTalk meanwhile have secured access to all of Sky Sports channels through its own network.

Read more:
Competition Appeals Tribunal website

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