BSkyB ordered to cut sports channel prices

Britain's broadcasting watchdog ordered pay-TV giant BSkyB yesterdayto cut the price it charges other media companies to air its two main sports channels.

BSkyB said immediately that it would appeal against the ruling by the Ofcom media regulator, made after a three-year investigation, to ensure "free and effective competition".

Ofcom, which launched a probe after concerns voiced by Sky rivals BT, Virgin Media, TopUp TV and Setanta, said it had concluded that Sky has "market power in the wholesale provision of premium channels.

"Ofcom has also concluded that Sky exploits this market power by restricting the distribution of its premium channels to rival pay TV providers. This prevents fair and effective competition, reduces consumer choice and holds back innovation and investment by Sky's rivals.

"Today's decisions are therefore designed to ensure fair and effective competition which should lead to greater investment, innovation and choice for consumers," it added in a statement.

In its ruling Ofcom set a wholesale price for Sky Sports 1 and 2 some 23 per cent below the current rate when sold on a standalone basis, and 10 per cent less when sold as part of a package.

Sky immediately blasted the decision, saying it would appeal. "Ofcom's actions represent an unprecedented and unwarranted intervention," said a spokesman.

"This is a marketplace where customers are well served with high levels of choice and innovation. Consumers will not benefit if regulators blunt incentives to invest and take risks.

"After three years of engagement with Ofcom, we now look forward to a judicial process which will apply impartial analysis and clear legal standards."

Responding to the Sky legal action, Ofcom said in a statement: "We are happy to defend our decision wherever necessary."