Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
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the channels that lie within that relevant market (at least until recently) are Sky Sports
1, Sky Sports 2 and Setanta Sports 1 279 .
Our position in the Second Pay TV Consultation
5.19 We consulted on the conclusion that Sky had market power in the wholesale supply
of channels or packages of channels containing live FAPL matches. Our view was
that Sky had market power and was likely to hold that position in that relevant market
for the next three to four years. Our analysis suggested that entry barriers were such
that market power was likely to persist. By way of background, we based that
conclusion on the following:
� Sky consistently won the rights to televise live FAPL matches (the “Live FAPL
Rights”) since 1992, until 2006 when the European Commission’s intervention
ensured that one company could no longer win all the rights. In the Second Pay
TV Consultation, we estimated that Sky’s market share (when estimated on the
basis of wholesale revenues) in May 2008 was [ � ]% [over 70%].
� Sky’s market share remained high even when we expanded our market definition
to include other popular football contests.
� We found significant barriers to entry in acquiring the Live FAPL Rights. Sky’s
established subscriber base, coupled with other factors such as its vertical
integration and brand strength, meant that it could afford to bid a larger amount
than any other bidder.
� We admitted that market boundaries were not clear-cut. If some other football
competitions just outside our stated market represented partial substitutes for
FAPL content, we noted that it might in theory be possible to assemble those into
a competing offer. However we believed that no other single competition offered
the same volume of highly attractive sport as the FAPL. The staggered
availability of rights constituted an additional barrier to entry in creating such an
offer.
� We believed that the commercial balance of the relationships between Sky as a
wholesaler of these channels and other retailers was strongly in favour of Sky.
5.20 We acknowledged that if the rights ownership situation were to change significantly in
the future, we would revisit our assessment of market power.
channels that lie within the relevant market defined in this document (Sky Sports 1, Sky Sports 2 and
Setanta Sports 1) also lay within the market defined in the Second Pay TV Consultation. See Second
Pay TV Consultation, paragraphs 5.33-5.34.
279 Setanta went into administration on 23 June 2009, shortly after the live FAPL rights which had
been held by Setanta were awarded to ESPN. ESPN has announced that it has agreed a wholesale
deal with Sky for distribution on Sky’s DSat platform. It has also announced an intention to make its
channel including FAPL coverage ‘widely available across multiple pay-TV platforms’, although at the
time of writing no other details of availability across platforms other than Sky’s have been announced.
Our subsequent conclusions are likely to be independent of whether Setanta Sports 1, or some other
channel provided by ESPN, exists as part of the Core Premium Sports market.