Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
Figure 70 Table showing range of prices for consultation (£ per subscriber per
month)
0 2 5 6
Top of Bottom of
Product type Product
Rate-card
range for
consultati
range for
consultati
Cost-plus
on on
Sky Sports 1 13.48 11.24 9.41 9.07
Single channels
Sky Sports 2 13.48 11.24 9.41 3.21
Single Movies 12.48 9.61 7.58 5.64
Sky Sports 1 & 2
Sport- or movies-only bundles
Sky Movies Mix
18.39
16.59
16.48
15.73
14.10
12.38
11.34
5.64
All channels bundle Sky Sports 1 & 2 & Movies Mix 23.40 20.43 16.98 16.98
Sky Sports 1 & Single Movies 17.59 15.59 14.71 14.71
Sky Sports 2 & Single Movies 17.59 15.59 12.69 8.85
Other combinations
Sky Sports 1 & Movies Mix
Sky Sports 2 & Movies Mix
19.80
19.80
19.57
19.57
15.34
15.34
14.72
8.85
Sky Sports Mix & Single
Movies
20.60 18.58 16.98 16.98
Weighted average (by competitor volumes) 20.72 18.35 14.55 13.57
Note – the bottom end of the range of prices for consultation is mainly prices from the ‘smaller entrant
on DTT’ pricing scenario, except where these prices are lower than those calculated under a cost-plus
method. The weighted average price for the bottom end of the range for consultation is calculated
only using prices from the ‘smaller entrant on DTT’ scenario.
Range of wholesale prices for HD for consultation
9.199 Our preferred remedy also proposes to set an incremental wholesale price for the HD
versions of Core Premium channels, to mirror the way Sky sets its retail prices for
HD.
9.200 As set-out above, we have adopted a retail-minus calculation, similar to that used to
derive wholesale prices for standard definition channels. This involves deducting the
costs associated with basic HD channels and the costs of retailing HD from Sky’s
fixed retail fee per subscriber which is charged as a ‘add-on’ for access to HD
versions of the SD channels already available to the subscriber.
9.201 In discussing the methodology we have used we noted a number of sensitivities that
we have included in our analysis:
310
� Allocation of common costs between SD and HD: while we have allocated
common costs according to revenue, which results in about 1.4% of common
costs being allocated to HD services, we have considered an alternative
approach for net set-top box subsidies. Higher set-top box subsidies for HD
customers may warrant a higher allocation of these costs for recovery through
HD charges. Therefore we have considered a sensitivity on the allocation to HD
of this sub-category of common costs of a 2.8% allocation.
� Scale and number of HD subscribers: we have based our retail-minus calculation
on Sky’s scale and expected number of HD subscribers, but as a sensitivity also