³ÉÈËÂÛ̳

It's ironic that the ³ÉÈËÂÛ̳ - and an employee of the ³ÉÈËÂÛ̳, both funded by licence payers and therefore protected and feather-bedded from today's harsh economic realities, should feel qualified or competent to comment on commercial aspects of broadcasting.

Sky were well overdue for a bloodied nose, and I just hope OFCOM follows up with a couple of quick jabs as well. Sky have not ‘taken a risk’. Football was an absolute no-brainer, and they knew very well that fans would pay pretty much anything to watch their team. They held football fans to ransom in order to line their pockets and build their empire. They upped the subscription costs continuously, tying people in to unwanted packages and bundling the top sport up with about 60 channels of utter dross that nobody watches. The money has been a double-edged sword for football anyway. The EPL take virtually all of it, the lower leagues get zilch, and clubs compete with each other to see who can pay top stars the most and get into the most debt. And we’ve won only a fraction of the top European competitions compared to the ‘70s and ‘80s. Overall, football hasn’t benefitted IMO.

Sky don’t innovate either. They simply dressed football up with a few bells and whistles and charged the fans over the odds. HDTV is another example - it's just gilding the lily. They make you pay extra for prime boxing matches when you already pay a huge monthly charge for their sport. They don’t make films. They don’t make drama or comedy. All they do is wait for other companies to create and when it proves to be popular on terrestrial TV, they charge in and price everybody else out of the market, so that fans will follow and pay an inflated subscription charge to carry on watching it. I can’t understand this outpouring of support for Sky and can only conclude that some people LIKE being fleeced!

Robert,

I wonder if you think that it is ironic that BSkyB are complaining that Ofcom is forcing them to supply some channels to their competitors at a wholesale price, when they were only able to develop their presence in the broadband and telephony markets due to Ofcom forcing BT to supply services to their competitors at wholesale prices?

Im not usually into sematics but this is amazing termonology.

Surely Ofcom's role is to apply its brief impartially. This does not extend to dicretion on "being beastly"

"Ofcom: 'We could have been much beastlier to Sky'"

This begs the question rather, why were they not? If the monopoly position that Sky holds justifies a more robust reaction from Ofcom why did they let Sky off? (My guess is the the first reason for attacking Sky was the Sun's support for the Tories and not going in too hard as a way of reminding Sky that they may not get the Tory poodle they want after the election.)

To be honest, Ofcom could do worse that looking at the bundling of services into groups of channels. This is a prima facie anti-competitive situation and an abuse of a monopoly, isn't it?

While we are about it someone needs to tackle the whole business of confusion marketing (terms and conditions that cannot be understood by customers - as a deliberate act of corporate policy) by large organisations with market dominance, particularly mobile phone tariffs and the whole bundling business etc. These are most definitely against the interests of the consumer and the proper operation of the market..

Robust is probably the right word.
Do regulators like Ofcom have
Not ones that are big enough to sink into a beast like Sky.

Sky are being punished like Microsoft for being good at what they do.

Sky is a business and they are selling a service which consumers can opt to buy or not.

Because they have been providing this service for a long time they have naturally built up a large customer base, which makes them the dominant force in the market.

However, this does not stop competitors from creating their own unique programmes to make them more attractive.

Thinking about it, if Sky had not sold access to its channels to Virgin Media their service to Virgin Media customers would be greatly diminuished.

Sky is being punished because its good service has caused it to monopolise the market. Maybe competitors need to up their game by improving their own efforts to challenge that monopoly.

Until now the successful bidder for sports or film rights paid a premium because they expected to have a monopoly. As a result of the Ofcom ruling being a successful bidder seems to involve providing a resource that other broadcasters can tap into. If the losing bidder can always ask for access to the match/event/film where is the incentive to outbid a rival when they will be forced to act as a distributor of the material. Why not let the rival take the risk with the capital investment and buy in once you know you can sell the product? Is there a longer article in this on the consequences for the finances of sports clubs and events, or the rights bought by the ³ÉÈËÂÛ̳.

The most interesting aspect of this will ultimately be the combination of factors that will boost BT's nascent BT Vision product. The combination of Project Canvas (BT is a backer of the ³ÉÈËÂÛ̳ project) plus Sports rights plus third party Movie rights will make BT's product a credible threat to traditional pay TV operators (hence the OFT appeall by Sky and Virgin Media last week)...
I for one will drop Sky as soon as BT Vision has the Canvas + Sports upgrades... With Tony Ball (ex Sky CEO) on BT's board, expect some aggresive bundling...

Doesn't the fact that people are able to look at this blog disprove the analysis? Before Ofcom attacked BT it kept a grip on its monopoly, broadband cost 50 quid a month for a 512k connection, and virtually everyone had dial-up.

Then Ofcom took action, BT fought like hell against it but eventually lost, and now three-quarters of households have broadband and people like me pay a fiver a month for it.

I wonder what the footballs reaction to this will be. Total exclusivity clauses, royalties on the distributions, club by club negotiations.

"Those of us who've watched the movie of regulator versus dominating business many times over many years, know the script by heart: regulator rules; company screams blue murder about risk-taking and entrepreneurialism being trampled by wealth-destroying bureaucrats and it hires the most expensive lawyers to challenge the ruling; months or years later the definitive verdict arrives; in the meantime, the resourceful company has found a new way to reinforce its leadership"

exactly like the banking regulatory process only you forgot to mention the political interference that plays under the table and with the outcomes.

If the profit goes from sky then sport in general loses cash.
Maybe this is the reason for the lack of intervention?

But that would be too simplistic, surely?

Caledonian Comment

Rupert Murdoch and his employees are constantly commenting about the ³ÉÈËÂÛ̳, what's the difference ?

We live in a supposedly free country where everyone has the right to comment on whatever they want.

The ³ÉÈËÂÛ̳ is also our national broadcaster and this website is one of the most popular news sites on the internet so is it really that ironic that they're commenting on one of the news stories of the day or is it actually exactly what we pay them for ?

Mmm! Okay! It's a kind of pointless debate really, the ' room full of Bald men arguing about who gets the hair gel' .... the football teams will head off on their own and directly connect with the fans.

Same for the ³ÉÈËÂÛ̳ itself---they are talking about the 'broadcast stuff', but in reality are trying to stake out space in content creation (which they are good at --- and content accquisition which they are slightly dishonest at; but so they should be with state enforced subsidies)....and creating destination web sites

The 'what does this mean for Sky Tv????' like the 'Whither the ³ÉÈËÂÛ̳??'--(when ³ÉÈËÂÛ̳ = Broadcasting)---- debates are as relevant as 1897 articles on 'who will be the biggest hansom cab operator by 1910?" and " 10 good reasons why the Ottoman Empire is THE recovery play of the forthcoming 20th century!"

Robert,

Please move on to the major news of the last few days - Andy Haldane's speech in Hong Kong yesterday.

Why?

It's yet more news that seems to confirm that the BoE really does want to break up the banks.

It's the radical reform that our feeble, back-sliding, politicians are just too scared to countenance, but which the ordinary people of this country desperately need, to release them from the enslavement of the money-lenders.

It's the move that in the long run will secure an open balanced economy.

Something that we desperately need in the UK.

I omitted to give the link to Andy Haldane's speech.

It's here:

[Unsuitable/Broken URL removed by Moderator]

After today's horrific coach crash and appauling weather conditions in Scotland and Northern Ireland should this really have been the lead story at ten?

I think ITV News at Ten had their priorities right.

Calledonian Comment @ No.1 Very well and aptly put. 1

#7 newshounduk - Microsoft 'Good at what they do'!!!!!!!

What they did was use their dominant position in the Operating Systems market to fund the systematic driving out of any competition in a market they wanted

It is dificult to see anything innovative in Microsofts products... its Betamax - VHS in many instances..... for the resources they had, their products could have been a lot better

.... hunt around on youtube for the speech Gates gave late 90's telling the world the Internet was a non-starter!!!!

And it's still the case.... by far the most expensive part of a computer is Windows.... Amortized cost of Win 7 = $10'ish, to you from the high street £100......and you think Sky are ripping you off!!!!

#14 - The ³ÉÈËÂÛ̳ is NOT "our national broadcaster". Whether it ever was is a moot question, but it certainly isn't any more. It has a palpable political bias and a strange set of values which leads it to believe that paying millions of pounds to people with minimal talent is a good thing. It is a largely unaccountable organisation funded by means of a compulsory licence fee which renders it divorced from commercial reality. The salaries paid to its senior management are frankly not commensurate with the diet of biased news, sub-standard soaps, mind-numbing game shows and puerile reality shows it produces. Such generous self-indulgence coupled with paltry, poor quality output is hardly representative of the needs or wishes of the dragooned paying public.

Andy Haldane's article is at



Please note one particular point:

"He contrasts the experience of the relatively simple Glass-Steagall Act to the complexities of the Basel II regulations".

Do we want new arrangements that everyone can understand and act on, or something that can only be seen by a few - i.e. the Basel Black Box?

How much of Sky's dominance is down to the complacency and ineptitude of other broadcasters?

The ³ÉÈËÂÛ̳ and ITV have shown much less commitment to sport, and in comparison to Sky provide 2nd rate coverage, even when regulators guarantee terrestrial broadcast rights.
Sports have certainly benefited financially from Sky's involvement; and at the end of the day, Sky's subscribers are prepared to pay the price.

The break up of rights into bundles failed miserably with Setanta, as it couldn't develop a sufficient subscriber base to cover the costs.
How is ESPN coping?
Will it be forced to offer its games to Sky at a comparable price?

Sky invested and won, as did the sports, unless subscribers decide they don't want the "luxury" of Sky, its business model holds up...

ITV and the ³ÉÈËÂÛ̳ both have digital presences, perhaps they or someone else should try competing, but can they match the product at the price?

#15 e2toe4

I think you are both right and wrong. Right in that the techonology that gives Sky a grip on content distribution is not the "technology of the future", but wrong in saying that this makes the debate irrelevant.

Firstly a good exploiter of market power is deft at leveraging it to create a strong position in emerging platforms (e.g. broadcasting is not Murdochs first one). Secondly, the very existence of monopoly through an old platform *prevents* new platforms from developing, as users and in particular content are witheld until the monopolist is ready in the new platform.

As others here have said, Microsoft have been enjoying a natural desktop monopoly for decades, because regulators believed that such monopolies are unsustainable in the long run, due to technology innovation. To what extent has it held innovation back? So Apple have recently realised that they cannot live on design alone, taken a leaf out of the MS book, and put every effort into creating a content distribution monopoly for smartphones, severely hindering anyone who might innovate to improve this kind of platform. It will probably take a decade again before competition authorities catch up.

I think the ones who are being disingenious are the likes of the Premier League who are siding with Sky. Surely the more open market means more viewers of the football (and more income for Sky, by the way) which will further increase the value of the football rights. Sky might have to pay more for the football rights (although in their dominant position there are not really been any competitors to Sky to fund the ludicrous level of footballers' wages). But I cannot understand how the Premier League can lose out by this ruling.

I love Sky. It bottled up "sport", and I could ignore pretty much all of it. It was always the programming I enjoy that got pushed aside for football, cricket or (for goodness sake!) snooker. The last few years have been bliss. For those who don't know: sport is something you do, not watch.

Couldn't it be these 'could have' sub-clauses are more warnings?

And no Robert, we buy TVs to watch telly, not laptops or PCs. Not everyone wants a computer or can use a computer but we can all turn the telly on or off and even change channels. Consoling tones about movies being available via broadband won't soothe everyone.

I'm no fan of Sky in terms of what it delivers, but the point which seems to be missed by many (especially the non commercial types at the ³ÉÈËÂÛ̳) is that like it or not, Murdoch took a huge commercial risk - and won.

It is easy to look back and say "ah well, there was no chance he could fail", but that is the typical response from people who don't know what it feels like to take a real commercial risk that can all go badly wrong (and often does - Setanta being the obvious case).

Sky does not have a monopoly based upon state control, unlike many of the ex public owned companies, nor is it protected by self serving regulation, such as in financial services.

We need to start celebrating success and looking to emulate, not tear it down to the lowest common denominator.

Everyone seems to forget what Murdoch got right and BSB, Setanta and others failed to do, is get to a critical mass subscriber base earlier than everyone else and then maintain that monopoly. He did this by paying more than anyone else would contemplate to get the football rights (probably losing money ab initio to establish a monopoly). Sky then reinforced its monopoly by getting rights to the other popular/wide audience sports and marketing like hell to preserve its base. Ofcoms' challenge is to reduce Sky's power to resist new entrants, so that the pay TV market doesn't atrophy in the hands of Sky's monoploy. Sky, like turkeys not voting for Christmas, will defend this monopoly tooth and claw. If we want innovation and development of pay TV through whatever media, the Sky TV monopoly will need to be challenged, unless somebody bigger with deeper pockets can break in (Microsoft?Google??).

SKY has been ripping people off for years, but when they first started they didn't really have any competition. Now they do and they haven't changed - about time they got told to bring down their prices.

There is no justification for the charges they ask for, non at all.

Sky's line is that Ofcom's unwarranted interference will mean less money for British sport and less innovation in television.

Both of these things are probably true. They are irrelevant to me though, because I can't afford Sky and probably wouldn't subscribe to it if I could because I don't watch much television.

It would be so good to be able to watch England play a Test match though.
I think the ³ÉÈËÂÛ̳ should broadcast Test matches. I'd be happy to pay a tenner to watch a match, but unfortunately it doesn't seem to be an option.

Shame on Ofcom claiming to be an independant regulator.

This is not acting in the interests of the public, they are a political lap-dog at the beck and call of our government and this is just about giving Rupert Murdoch a bloody nose.

But consider this...I would cheerfully ditch the ³ÉÈËÂÛ̳ and the exorbitant licence fee and keep paying for Sky...how many others feel the same...does anyone dare hold a ballot ???

Thought not.

i would safely say that the most of the above comments have come from people who don't watch sky, sports or otherwise or indeed that much telly at all bar the news, question time, and politics today or something like that. and wont even know or care how much sky cost's. so may i say i pay £27 for sky sports1 only and could not watch man utd playing in Europe on Tues night because they mess about and it could be show en on either 1,2, or 3 it happens they showed it on 2 which i don't have so i missed it.. so the only way to be sure you see the game you want to is to have all the sports channels which would cost at least £36..
now i was mostly interested in the premier league so as sky told me Sky Sports 1 gives you access to live football action from the Barclays Premier League as well as Football League and Coca-Cola Championship fixtures all throughout the footballing season. thats what i got but that is not necessarily the case because sky almost every week will put at least one or two premier league games on sports 2 why??
answer they are trying to make people who cant afford it take out the whole package which isn't fair.. i have been with sky since 1992 but faithful customers get no rewards at all everything is geared to the new customer with free box's fitting and such.. so thats why i am glad to see this ruling now it should have happened years ago...

Chris said
I'm no fan of Sky in terms of what it delivers, but the point which seems to be missed by many (especially the non commercial types at the ³ÉÈËÂÛ̳) is that like it or not, Murdoch took a huge commercial risk - and won.
but the real point which seems to be missed by you is that he took no risk what so ever because he knew what he was going to do from the start, and that was rip of the ordinary man/woman in the street..

Sky fought long and hard to get Ofcom to force BT to open up it's networks and exchanges so that Sky could then use BT's network to sell it's own brand of Broadband and phone packages, using BT's lines and exchanges.

So it is only right that Sky do the same with the Sports rights, wholesaling them to competitors. Don't forget, Sky are still making the bulk of the profit out of this, charging over £10 month to BT & Virgin. There's no way they will lose out financially but that isn't the point.

They wanted to maintain and increase their monopoly on Sports events and keep increasing the price to users.

This is a good ruling for all genuine sports fans.

Financial city experts performed the Maths and figured if you take a monthly Sky charge and multiply it by 12 for each year's subscription on an ongoing basis*, you are being ripped off big time and is a mugs game, Harry

*=(plus additional costs for pay per view movies and better channels etc)

Sky quite frankly is the good,the bad and the ugly of television. The good it offers a lot of live EPL and other sports to it's customers. The bad is the ridiculous amount of money it pours into the EPL every season, all is happenning is football gets greeder and greeder and in the end Sky will make a rod for their own back, the ugly if you like sport you cannot just subscribe to Sky sports 1,2 or 3 you have to firstly subscribe to channels and channels of total garbage upon garbage, then and only then can you have your sport. At least with freeview the garbage is free and not costing a subscription.

#32- That's an intriguingly complex algorithm you ran to be able to conclude that Sky represents comparitively good value - you don't work for one of our failed banks do you?

What do you find so tantalising about Sky? Is it the non stop torrent of advertising or the cutting edge documentary or cultural content?

On reflection perhaps you're actually one of Rupe's employees - I mean let's face it only a Krankies fan would consider Sky to be superior to the ³ÉÈËÂÛ̳ and you can't be that dumb because you can write can't you? (You did write that by yourself didn't you?).

A number of preceding comments are very interesting and informative to say the least. We all know that the present problem of taming the monopolistic beast is routed in the era of the Thatcherite reign when in 2003 Ofcom rose from the ashes of several regulatory agencies including ITC and the Radio Authority.

Following losses by the then Sky Television plc and ill-fated British Satellite Broadcasting both merged to form BSkyB. If this could happen to a government backed franchise then it is beyond the government or its quango to bring it to heel. Why didn't ITC regulate the culprit? The tell tale sign was there when BSkyB purchased exclusive rights to FA Premiere League in 1992 but the government was in collusion with BSkyB for quid pro quo favours.

Rupert Murdoch had it all tactfully planned to stump the then regulatory authority which was ITC when it added sky sports channels to its bouquet. Its anti-competitive behaviour is also blamed for the death of OnDigital. With ONdigital going into voluntary liquidation with liabilities of about £1.2bn football clubs sustained financial losses. I am sure they are happy to stay with Sky as their finance is guaranteed.

The problem of regulating BSkyB, which has now grown into a dominant monopoly is against the interest of the consumer. It is a price dictator and price maker in a captive market which is purely hedonistic, patronised by entertainment seekers who will pay any amount of subscription to watch sports. This type of audience needs protection from themselves. Hence, the need for Ofcom to issue diktat to BSkyB so that television programming is even and fairly distributed to the British audience.

Being a major transporter on the largest platform for subscription satellite television channels it It's astute move in entrenching itself as a challenger to established institution is unstoppable as it has become too tenacious. It originally created a market which was non-existent by giving away free dish and receiver to British households.

Its vertical and horizontal integration of products and services like 20th Century Fox Film has empowered BSkyB to the extent that it now dares to bare its teeth to the toothless Ofcom which sadly inherited this daunting task of regulating a dangerous predator and a menace to PSB. We are witnessing the failure of the regulator which failed to see what was coming or had the power to intervene.

I don't condone the business strategies deployed by Rupert Murdoch in pursuit of capitalism, albeit the worst kind, because as a successful businessman he had the sagacity to sniff, perceive, foresee and capitalise by taking on the government-backed big boys like the ³ÉÈËÂÛ̳ which did not have the vision nor the political will to compete with BSkyB aggressive marketing. You cannot blame the burlars if you leave your doors and windows open to them.

If OFCOM could have harder on Sky, why weren't they?

Sky enjoys very close to a monopoly on football. Giving up only one out of six blocks of matches does not make for fair competitrion.