Sky CEO Jeremy Darroch has said Ofcom rejected proposals to wholesale its premium channels, claiming the regulator wanted to pursue greater reductions to the price.
Writing in the Daily Telegraph on the day Phase 3 of the ongoing pay-TV investigation completes, Darroch said the satcaster had tried to resolve issues emerging from Ofcom’s enquiry by entering into wholesale arrangements with other platforms. “We also offered substantial price discounts as a reward for success in selling our channels. In return, we asked for the go-ahead for our plans to offer a new pay-TV service via digital terrestrial television. This would have been good news all round, increasing choice and allowing the whole industry to get on with serving customers.”
According to Sky, the proposals were rejected in May 2008 in a letter from Ofcom CEO Ed Richards: “our respective views on the issue of the price of any wholesale offering remained, despite our respective best efforts, apart.” Sky believes its proposals to be sufficient against the 30% wholesale price cuts put forward by the regulator.
The Ofcom pay-TV investigation, though not strictly about BSkyB, has centred on the supply of premium channels including Sky Movies and Sky Sports, and to a lesser extent the proposed Picnic pay DTT service. Ofcom says it considers Sky to have market power in the wholesale supply of channels, particularly movies and football, and that it is acting on an incentive to limit the distribution of these channels to rival TV platforms.
Darroch returned to Sky’s argument that the imposition of wholesale prices does not reflect the risks and costs involved in the business and amounted to a tax that would subsidise BT and Virgin Media. The cablenet has around 600,000 premium subscribers, and although it continues to claim that to promote the Sky premiums is uneconomic, CEO Neil Berkett recently said relations with Sky are the best they have ever been.