Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
1.79 Both of these residual concerns could be addressed by making the SVoD rights
available transparently and separately from the linear channel rights.
16
� This could enable the launch of innovative new services, to the benefit of
consumers.
� An SVoD service would be likely to be a closer substitute for the linear service
than the current closest substitute, which is pay per view. It could therefore
provide an increased constraint on wholesale margins, thereby offering the
possibility of addressing our residual concerns about high wholesale margins on
movies.
1.80 We commented in our last document on the possibility of disruptive change in the
way movie content is distributed, enabling new and innovative services, to the benefit
of consumers. And we noted that this may not therefore be a good time for a
regulator to attempt to set detailed behavioural rules governing the sale of movie
content rights.
1.81 We remain conscious of this risk, but we are also aware of the risk that the way in
which SVoD movie rights are currently being sold may be holding back innovation,
since it is placing these rights in the hands of a company which does not have an
incentive to exploit them. We note in this context that [ � ]. Both of these
considerations argue in favour of some form of intervention.
1.82 If we were to intervene, it is likely that we would make a market investigation
reference to the Competition Commission under the Enterprise Act 2002 (EA02). We
believe that we can satisfy the threshold for making such a reference, in that we have
reasonable grounds to suspect that there are features of the market that prevent,
restrict or distort competition. We also believe it may be appropriate to exercise our
discretion to do so, in that there may be specific forms of consumer detriment which
we cannot address using our powers as a sectoral regulator or competition authority,
but which the Competition Commission may be able to address using remedies
which are available to it.
1.83 We are not however consulting formally on such a reference at this stage. We first
wish to explore further with the studios whether their existing commercial plans are
likely to result in the more effective exploitation of SVoD rights, thereby avoiding the
need for regulatory intervention. We plan to do so during the consultation period for
this document, and will set out our proposed way forward subsequently.
Sports rights
1.84 The wholesale must-offer obligation which we propose above should also ensure the
effective distribution of sports channels across different platforms. We do however
have a residual concern in relation to collective selling. There are benefits to
collective selling, which have been acknowledged by competition authorities;
however, we would want to ensure that these are not outweighed by concerns
stemming from its role in creating market power.
1.85 The last two FAPL auctions have been governed by commitments given to the
European Commission by the FAPL, which were intended to limit the effects of
collective selling. These commitments will not however apply to the next FAPL
auction, in 2012, and we therefore intend to review with the FAPL how it intends to
ensure that the 2012 auction complies with competition law. That might involve
exploring with the FAPL whether it is willing to provide new commitments.