Sky may be forced to cut the prices it charges rivals

[dutchman]

Ofcom is expected to rule later that Sky will have to introduce a cap on the prices it charges its rivals to show its premium sport and film channels.

The predicted ruling would effectively mean that Sky is forced to reduce the prices it charges Virgin Media and BT Vision to show such channels.

Sky has already said it will appeal against such a move. Last year it said it would use all "legal avenues".

The Rugby Football Union has warned the ruling may cut its TV earnings by 60%.

Other sporting bodies, including the Football Association, the England and Wales Cricket Board, the Professional Golfers' Association, the Premier League and the Rugby Football League have also written to Ofcom to warn that their TV revenues would be reduced.

'Promoting choice'

Ofcom said in a preliminary proposal last June that putting a cap on the wholesale prices Sky charged its rivals was the "most appropriate way of ensuring fair and effective competition".

It said the change would enable more rival broadcasters to access and offer the channels to viewers, "thereby promoting choice and innovation".

Ofcom added that "we do not believe that this proposed remedy would have a disproportionate impact on Sky".

Sky responded at the time by saying it "fundamentally" disagreed with Ofcom over the issue.

BT said in January that if Ofcom's final ruling did call for price caps, it was ready to enter a price war with Sky over the price charged for viewers to watch premium sports events, including football and cricket.

BT said its BT Vision service would aim to undercut Sky's own prices for such subscription channels as Sky Sports 1 and 2.

Sky said in January that it "would be perverse" to force it to sell its sport channels "on the cheap to competitors who have shown no appetite to invest in content or support British sport".

"Consumers do not benefit if regulation undermines the incentives for companies to invest," it added.