BSkyB Loses Sports Channel Prices Appeal

Date : 08/08/2012 @ 1:27PM
Source : Dow Jones News
Stock : News Corp. (MM) (NWSA)
Quote : 13.75  0.04 (0.29%) @ 5:35PM

BSkyB Loses Sports Channel Prices Appeal

BSkyB (LSE:BSY)
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By Lilly Vitorovich

LONDON--British Sky Broadcasting Group PLC (BSY.LN) Wednesday lost its appeal against a 2010 regulatory ruling that said the U.K. pay-television operator must charge rivals less for its premium sports content than it originally wanted.

BSkyB had appealed to the Competition Appeals Tribunal--which hears appeals against competition-law decisions by the Office of Fair Trading, the Competition Commission and sector regulators---to overturn a ruling by the nation's communications regulator Ofcom. The tribunal published Wednesday's ruling in a 16-page document on its website.

In March 2010, Ofcom ruled that BSkyB--which produces and airs the vast majority of Premier League soccer games on its pay-TV service in the U.K.--must allow its rivals to buy its premium sports channels, Sky Sports 1 and 2, at a lower price. Its competitors, which include Virgin Media Inc. (VMED.LN) and BT Group PLC (BT.A.LN), buy the sports content to show on their own services.

Officials at BSkyB, Virgin Media, and BT Group weren't immediately available for comment.

Ofcom said BSkyB, the U.K.'s biggest pay-television operator by revenue, had exploited its market power in the sector by restricting the distribution of its premium sports channels to rival pay-TV providers.

Ofcom's decision triggered a price war that brought down the cost of watching televised sport in the U.K.

BSkyB held exclusive U.K. broadcast rights to the Premier League matches until 2006, when the European Commission opened up the bidding process after ruling that a single broadcaster couldn't hold all of the rights. But by then, BSkyB had amassed a large customer base in the U.K., which currently stands at 10.6 million customers.

In June, BSkyB spent 2.28 billion pounds ($3.57 billion) to secure the bulk of the U.K. broadcast rights for another three years, starting from 2013. That was well over a third higher than the GBP1.62 billion it paid at the previous rights auction in 2009.

The remaining rights were bought by U.K. telecommunications operator BT, whose pay-TV product BT Vision competes against BSkyB, for GBP738 million.

In March 2010, Ofcom said BSkyB must cut the price that it charges a rival for a single sports channel by 23% to GBP10.63 per subscriber per month. The price for both channels, Sky Sports 1 and 2, fell around 11% to GBP17.14.

BSkyB counts News Corp. (NWS) as its biggest shareholder with a 39% stake. News Corp. also owns this newswire and The Wall Street Journal.

BSkyB shares closed 1 pence higher at 743 pence Wednesday, valuing the company at GBP12.41 billion on the London bourse.

Write to Lilly Vitorovich at lilly.vitorovich@dowjones.com; Twitter: @LillyVitorovich

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