Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
of the studios might mean that this was the wrong time to make a reference to the
CC. Since then, as noted above, [ � ]. Our view is that there is unlikely to be a
substantial change in the way these rights are awarded in the UK in the short to
medium term.
12.33 We believe that before consulting formally on a reference, it would be constructive to
engage further with the Major Hollywood Studios, to establish whether it is possible
to avoid the need for further intervention as a result of their existing commercial
strategies. We would prefer if possible to avoid the burden that a reference would
entail and the potential additional regulation that could result, if the need for it would
otherwise be obviated by the studios’ strategies. We would expect that to take place
over the next few months, with a possible consultation on a reference to follow
depending on the outcome of that engagement.
12.34 If there was a reference to the CC there would be some inevitable interaction
between the CC’s consideration and our proposed wholesale must-offer. They would
be targeted at different concerns, but there would be some analytical overlap. In the
longer term, an intervention by the CC on SVoD rights might require us to revisit the
analysis behind a wholesale must-offer, but we would in any case expect to review
the wholesale must-offer in the event of a material change in the way rights are sold.
A wholesale must-offer would be likely to have a more immediate effect on
competition at the retail level by improving distribution of linear channels. It would
ensure that content was more widely available within a short period from coming into
force. An intervention at the rights level would by its nature take longer. Rights come
up for renewal on a staggered basis – for example, as we have seen above, some of
the movies contracts do not now come up for renewal until [ � ].
Sport
12.35 We noted in Section 5 that Sky’s market power in the wholesale of Core Premium
Sports channels depends to a significant extent on its control of the majority of the
most important FAPL content. We noted in Section 3 that the mechanism by which
this content is aggregated is collective selling by the football clubs. There is a
substantial body of case law which has considered whether such collective selling is
acceptable under competition law, including the investigation carried out the by
European Commission which led to the commitments which governed the last two
auctions 571 .
12.36 This is a complex area, because while we do have concerns about the role of
collective selling in creating market power, there are also some acknowledged
benefits associated with collective selling. These were recognised in the White Paper
on Sport published by the European Commission in 2007 572 , which stated that
collective selling has “the potential of improving the media product and its distribution
to the advantage of football clubs, broadcasters and viewers” 573 . The Commission
identified three types of benefits:
571
See the documents under the European Commission’s reference: COMP/38.173 - The Football
Association Premier League Limited.
572 http://ec.europa.eu/sport/white-paper/index_en.htm.
573 Annex I: Sport and EU competition rules, paragraph 3.1.3.1.1.
343