Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
Retail bundling
4.56 With respect to Sky’s specific criticism relating to retail bundling, our view is that Sky
mischaracterises our assessment of the constraints on suppliers of premium
channels. The assessment of critical loss only considers the indirect constraint from
final consumers switching away as a result of a full pass though of the price rise.
However, we also separately consider the opportunity for direct demand side
substitution, or direct supply side substitution.
4.57 To take Sky’s example as an illustration, if Fox News (a 24 hour news channel) was
to impose a carriage fee price rise on retailers, a retailer such as Sky or Virgin could
switch away to alternative substitute 24 hour news channels – for example Sky
News, BBC News, CNN, or CNBC. Alternatively, other channel suppliers might be
incentivised to enter the market in response to a price rise. In this case, direct
demand side substitution would be likely to constrain a channel wholesaler.
Relevance of previous findings
Our position in the Second Pay TV Consultation
4.58 In our first consultation we reviewed a number of recent previous findings of other UK
and European competition authorities in their investigations into TV markets. We
stated that previous decisions can help identify relevant issues, but they do not
negate the need for a full review of the relevant markets based on available
evidence.
4.59 A number of previous findings from other competition authorities 78 have found that
rights to show certain types of TV content are in narrow markets and that the joint
selling of these rights can lead to competition concerns downstream.
4.60 With respect to FAPL, the Commission Decision on the joint selling of media rights 79
found that TV rights to premium football events that are played regularly throughout
the year were themselves a relevant market.
4.61 There have been several findings from other competition authorities that consider
that the upstream provision of movies in the first pay TV window is in a narrow
content market 80 .
4.62 The Competition Commission set out its conclusions on market definition in its
investigation into the acquisition by Sky of a 17.9% stake in ITV (the ‘Competition
78 For example, Commission decision COMP C.2-37.398 Joint selling of commercial rights of the
UEFA Champions League, or Commission decision COMP/C.2/37.217 Joint selling of media rights of
the German Bundesliga.
79 Case COMP/C-2/38.173.
80 For example, Commission decisions, Case No COMP/M.3595 - Sony / MGM (2005), Case No
COMP/M.2050 – Vivendi / Canal+ / Seagram (2000), or COMP/M.2876, Newscorp/Telepiù (2003).
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