Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
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is appropriate – although challenging – to conduct the HMT from competitive
prices.
4.68 We agree with Sky that that previous cases should not be treated as precedent in our
current assessment of markets. We do not consider the CC’s or other findings
directly relevant to our current assessment and have conducted our assessment
afresh based on a wide range of evidence.
Assessment of markets for the wholesale of premium sports channels
4.69 In our Second Pay TV Consultation we set out our view that the relevant economic
market for the wholesale of Core Premium sports channels comprised Sky Sports 1,
Sky Sports 2 and Setanta Sports 1. The most important of these channels is Sky
Sports 1 and this is the starting point for our analysis. It is a channel wholesaled as a
stand-alone premium sports channel, or within wider bundles of channels, for
example with Sky Sports 2, 3 and Xtra or Sky Movies channels. The channel
contains a range of valuable sports programming including certain key live
broadcasts such as live FAPL matches 87 , live Test and one day cricket.
4.70 Sky Sports 1 has a number of characteristics that make it particularly attractive to a
pay TV retailers. In particular:
� It contains a very significant volume of live 88 sports content.
� Much of that sports content is highly valued by subscribers – as reflected both in
the preferences of those subscribers and in the amounts paid for the underlying
rights.
� It shows live events that are available both frequently and regularly, including,
most notably live FAPL. This regularity is particularly important for building and
sustaining a subscription pay TV offering.
4.71 Sports content is also broadcast on other dedicated sport channels (such as the
other Sky Sports channels, Setanta Sports channels, Eurosport channels or Extreme
Sports) and general entertainment channels (such as BBC1, ITV1 or Sky One). A
wide variety of sport is available on FTA channels. However, premium sports
channels differ from these channels because they have access to the most valuable
and regularly-broadcast sports rights such as live FAPL.
4.72 Figure 7 illustrates the key content that is available on Sky Sports 1 and on the most
likely substitutes for Sky Sports 1:
� Sky Sports 1 accounts for the majority of FAPL content (two thirds of games
broadcast and about 59% of hours broadcast) 89 , along with the Carling Cup and
87 There were 87 live matches on Sky Sports 1 in the 2007/08 season.
88 In our Second Pay TV consultation we set out evidence of why we believed that consumers have a
strong preference for live content over pre-recorded content. This was illustrated by the value of live
and pre-recorded coverage. For example, while the live FAPL rights were sold in 2006 for £568m, the
delayed rights were sold for just £28 million and the highlights coverage for just £57m. See Ofcom’s
Second Pay TV consultation Annex 6 paragraph 5.3.
89 Our analysis of BARB data indicates that on average the programme length of Setanta’s live
Premier League coverage was longer than Sky’s.