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Richard Branson’s Virgin Media has convinced UK media regulator Ofcom to investigate Rupert Murdoch’s BSkyB digital satellite network over the withdrawal of several of its channels from digital cable and terrestrial platforms. Also a channel operator, Sky pulled several entertainment and news channels this month from Virgin (formerly ntl/Telewest) after the companies failed to negotiate financial terms of a new carriage deal, meaning the loss of shows like Lost for 3.3 million viewers. Ofcom just announced it “will investigate the pay TV market” following a joint complaint from BT, Setanta, Top Up TV, and Virgin Media.
Why have the others joined Virgin? This wide-ranging investigation portends broader competition concerns as the UK’s digital TV providers – many of which also now provide broadband, mobile and telco service – vie for market share. Though Virgin has countered by launching an on-demand, pseudo-PVR service, the loss of key shows is a blow to the newly rebranded company. Murdoch’s Sky is winning few friends in the business so far this year, having recently announced separate plans to pull some channels from the Freeview digital terrestrial TV platform to free up space for its own premium offerings, requiring consumers to buy a new set-top box and subscription card. A parallel investigation is already ongoing after Sky ruffled feathers by purchasing a 17.9 percent stake in ITV, designed to thwart a probable takeover bid from Virgin. If it finds the market is unfair, Ofcom could refer BSkyB to the Competition Commission.
BSkyB countered by telling Ofcom that it is, in fact, Virgin which is anti-competitive and by releasing a statement: “The marketplace for entertainment and communications services is fiercely competitive and changing fast. From the BBC to Google, BT to Apple and Vodafone to Virgin Media amongst many others, customers have never had a broader set of businesses competing for their time and custom.”