Criticisms of Sky UK
The British media company
Controversy over Sky's operation of
Gordon Brown stated in 2011 that during his term as prime minister (2007–2010), News Corporation attempted to affect government policy with regard to the BBC in pursuit of BSkyB's own commercial interests.
In June 2010, News Corporation launched a takeover bid for the remaining shares in the company. There was widespread opposition to the bid, on the grounds that it would give NewsCorp too dominant a position in the British media. The bid was withdrawn in July 2011 following the News International phone hacking scandal. The British Office of Communications (Ofcom) launched an enquiry that same month to determine whether BSkyB should continue to hold a licence to broadcast. In September 2012, Ofcom ruled that BSkyB could retain its licence.
An attempt by
Political corruption
On 12 July 2011, former
"Mr James Murdoch, which included his cold assertion that profit not standards was what mattered in the media, underpinned an ever more aggressive News International and BSkyB agenda under his and Mrs Brooks’ leadership that was brutal in its simplicity. Their aim was to cut the BBC licence fee, to force BBC online to charge for its content, for the BBC to sell off its commercial activities, to open up more national sporting events to bids from BSkyB and move them away from the BBC, to open up the cable and satellite infrastructure market, and to reduce the power of their regulator, Ofcom. I rejected those policies."[7]
As a result of the furore over
In light of the phone hacking revelations, the UK media regulator Ofcom took the decision on 8 July 2011 to be kept informed of the phone hacking investigation and to launch a "fit and proper" test, as a result of BSkyB's majority News Corp ownership (part of its obligations under the UK Broadcasting Act), in order to remain "satisfied that any person (which will include controlling directors and shareholders) holding a broadcasting licence remains fit and proper to hold those licences."[11][12]
On 20 September 2012, BSkyB was found "fit and proper" to retain a licence to broadcast by the British Office of Communications (Ofcom). Ofcom stated in its report that "Ofcom’s duty to be satisfied that a licensee is fit and proper is ongoing. Should further relevant evidence become available in the future, Ofcom would need to consider that evidence in order to fulfill its duty."[13]
News Corporation takeover bid 2010
As part of
This was followed by the same argument from the
Pressure group 38 Degrees began a petition to Vince Cable, arguing that News Corporation (and Murdoch's) proposed shareholding would stifle a "free and diverse UK media" and affect UK broadcasting impartiality rules.[20] Global campaigning organisation, Avaaz, also opposed the deal, with hundreds of thousands of its members signing petitions targeting the UK government.[21]
Although the bid was "dropped after only five weeks"[22] some media commentators presumed it had been done to "bide time"[22] and that News Corp were "still confident" they could prove their bid was not "a serious threat to competition".[23]
In October 2010, a group of media companies – accounting for a third of Fleet Street and the BBC – jointly wrote to Vince Cable, the Business Secretary, to lay out their reasons for the BSkyB share bid being a breach of media plurality.[24] The BBC's contribution to the letter was subsequently attacked in a (News International owned) Times editorial.[25]
Competition and vertical integration
Television
Ofcom complained that Sky's plan to operate pay TV services on Freeview was "generating serious consumer detriment"[26] and the National Consumer Council call Sky's plan "bad news for consumers,"[27] combined with representations from BT, Setanta, Top Up TV, and Virgin Media caused Ofcom to launch an investigation into the "features of the [UK pay TV] market, including control over content, ownership of distribution platforms, retail subscriber bases and vertical integration."[28]
Sky repeatedly used its lawyers to lodge complaints with the soon-to-be-rival YouView service, considered by some to be a delaying tactic in order to promote its own services, especially considering its failure to complain about other services, such as Google TV.[29]
On 13 July 2011, MP
"The company has lots of technological innovation that only a robust entrepreneur could to bring to British society, but it has also often been profoundly anti-competitive. I believe that the bundling of channels so as to increase the profit and make it impossible for others to participate in the market is anti-competitive. I believe that the way in which the application programming interface—the operating system—has been used has been anti-competitive and that Sky has deliberately set about selling set-top boxes elsewhere, outside areas where they have proper rights. If one visits a flat in Spain where a British person lives, one finds that they mysteriously manage to have a Sky box there even though it is registered to a house in the United Kingdom."
Films
On 4 August 2010, Ofcom asked the Competition Commission to investigate concerns regarding the sale and distribution of subscription premium Pay TV films.[31] Ofcom was concerned in particular that the way in which these films are sold and distributed created a situation in which Sky had the incentive and ability to distort competition. The end result for consumers is less choice, less innovation and higher prices. Ofcom couldn't address these concerns fully using its powers and referred them to the Competition Commission. The referral related to two specific films markets. The first concerned the rights to films sold by the major Hollywood studios to broadcast films for the first time on pay TV. And the second concerned the wholesale supply of pay TV packages containing films channels, which are based on those rights. The Competition Commission had a maximum of two years to investigate and reach a decision on the concerns raised by Ofcom.
On 8 February 2011, a working paper published on the Competition Commission website, entitled "Profitability of Sky", said Sky is making "excessive profits" from its
In a provisional decision published on 19 August 2011, the Competition Commission said BSkyB's contracts with the six major Hollywood studios present a significant barrier to entry to potential competitors and that prices charged by Sky are too high.[34] The commission said the adverse effect on competition caused by Sky's film domination meant that consumers were paying £50m to £60m a year more than would otherwise be the case. Among a number of recommendations from the Competition Commission, the regulator said Sky should be restricted from signing exclusivity deals with all of the major Hollywood film studios for film rights in the so-called "first subscription pay-television window", exclusivity deals with the film giants should be weakened so rival operators can buy the rights to other distribution methods and competitors would be able to rival Sky Movies by offering their own selection of new releases.
In March 2012, the commission signalled a change of heart after deciding it needed to extend the investigation to take into account the impact of Netflix launching a UK-subscription VoD movie service in January and the move by LoveFilm to extend its rental-by-post model to offer a similar online service to customers.[35] On 20 April 2012, Ofcom told the Competition Commission to stick to its guns and break Sky's hold on the pay-TV film market, arguing that the arrival of Netflix and LoveFilm had not altered the broadcaster's dominance.[36]
On 23 May 2012, the Competition Commission revised its provisional findings indicating that video on demand rivals such as LoveFilm and Netflix provide a vibrant market for consumers and that BSkyB should face no action from regulators over its monopoly of UK pay-TV film rights.[35] While the regulator dropped any proposal to act against BSkyB, it said that competition in the overall pay-TV retail market was ineffective. However, the Competition Commission said it could not act on this as the scope of the investigation was limited to the first subscription pay-TV window only. On 2 August, the Competition Commission filed its final report, upholding its revised assessment.[37] The decision marked the first time that the Competition Commission had reversed its initial decision in a market investigation.[38]
Sports
On 31 March 2010, Ofcom ordered BSkyB to cut the price of its premium sports channels.[39] Sky must offer Sky Sports 1 and 2 to rival operators at 23.4% below its own monthly price per subscriber. The wholesale price for service bundles was also to be reduced by 10.5%. Sky must also offer the high definition versions of Sky Sports 1 and 2 to rivals, but Ofcom will not set the prices after accepting that HD is a relatively new innovation. Instead, Sky must make the channels available on "fair, reasonable, and non-discriminatory terms". Ofcom also asked the Competition Commission to address concerns regarding the sale and distribution of subscription video-on-demand premium movie rights. British Sky Broadcasting immediately confirmed its intention to challenge Ofcom’s conclusions before the Competition Appeal Tribunal.[40]
On 29 April 2010, BSkyB reached an interim agreement with Ofcom to offer its flagship sports channels at a lower wholesale cost to
On 13 December 2010, Ofcom opened an investigation to consider a complaint submitted by Virgin Media in relation to the terms of wholesale supply by Sky to Virgin of Sky Sports 1 and Sky Sports 2 HD, namely that it is calculated on a per-device basis. On 24 February 2011, Ofcom issued a Draft Decision to the parties and Virgin withdrew its complaint on 16 March 2011, Ofcom therefore closed the case.[45] On 13 December 2010, Ofcom also opened an investigation to consider a complaint submitted by BT against Sky concerning the requirement on BT to provide Sky with information on BT Visions total number of pay subscribers and total number of customers. On 29 March 2011, Ofcom concluded its assessment of BT's complaint, issuing a decision to give a direction to Sky in respect of compliance with Condition 14A of each of the Television Licensable Content Service licences for Sky Sports 1 and Sky Sports 2. The direction states that a clause in Sky's agreement for the wholesale supply of Sky Sports 1 and Sky Sports 2 to BT, requiring BT to provide Sky with BT Vision's total number of pay subscribers and total number of customers is in breach of Condition 14A(1)(d) and required that clause to be removed forthwith.[46]
On 8 August 2012, the Competition Appeal Tribunal ruled that Ofcom's core competition concern about the way BSkyB sold its sports channels wholesale to competitors was "unfounded", namely that BSkyB had deliberately withheld wholesale supply of its premium channels from other retailers, preferring to be entirely absent and that in doing so had been acting on strategic incentives unrelated to normal commercial considerations of revenue/profit maximisation. However, BSkyB was unable to convince the tribunal that Ofcom misinterpreted its powers when it ordered a reduction in wholesale prices for Sky Sports 1 and 2.[47]
Despite these restrictions, Sky's £1 billion budget and the collapse of Setanta Sports in 2009, left it best-placed to buy any sport not considered a free-to-air "crown jewel".[48]
BSkyB's EPG charges
According to former
Rapture TV lodged complaints with both the Competition Commission and Ofcom concerning Sky charging free-to-air channels for the benefits of "Pay TV" listings on its EPG, despite separate carriage networks being used and free-to-air channels gaining no Pay TV benefit.[51]
This included the criticism that Sky charges all digital broadcasters a fee to subsidise their set top boxes, which according to EU Directive 98/94 should only cover boxes which are offered to non-Sky subscribers and Pay TV subscribers on the same terms (which was disputed by Rapture TV).[52]
This concern was highlighted by the BBC Director General,
Tax avoidance
As part of Newscorp Investments, a British holding company, BSkyB was part of a group which avoided tax over the decade up to 1999.[54]
References
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- ^ "Fox News Scandals, Political Influence Concerns Cast Long Shadow Over Sky Review". Variety. 29 June 2017. Retrieved 29 June 2017.
- ^ Sweney, Mark (25 April 2018). "Comcast launches rival £22bn Sky takeover bid". The Guardian. Retrieved 2 September 2019.
- ^ Waterson, Jim (20 September 2018). "Sky takeover battle must go to auction, orders regulator". the Guardian. Retrieved 20 September 2018.
- ^ Clarke, Stewart (9 October 2018). "Comcast Closes Deal for Fox's Sky Stake, Owns Over 75% of European Pay-TV Giant". Variety. Retrieved 29 August 2019.
- ^ [1], BBC News, "Brown accuses News International of using 'known criminals,'" Tuesday 12 July 2011
- ^ [2], Hansard: "Opposition Day - Rupert Murdoch and News Corporation Bid for BSkyB," 13th July 2011 - Column 400
- ^ [3], Independent.co.uk, "Rupert on the run: News Corp's UK future in doubt as MPs turn on Murdoch," Thursday 14 July 2011
- ^ [4], Telegraph.co.uk, "Phone hacking scandal: News Corp forces government to refer BSkyB deal to Competition Commission," Monday 11 July 2011
- ^ [5], Telegraph.co.uk, "Phone hacking: Murdoch pulls News Corp bid for BSkyB," Wednesday 13 July 2011
- ^ [7], FT.com, "Investors’ faith shaken in BSkyB bid," Friday 8 July 2011
- ^ Chozick, Amy; Somaiya, Ravi (20 September 2012). "British Regulator Declares BSkyB 'Fit and Proper'". The New York Times.
- ^ [8], Guardian Article - 'Rupert Murdoch's Sky Takeover should be blocked, Monday 13 September 2010
- ^ [9], The Daily Telegraph - Enders Analysis founder urges Vince Cable to block Murdoch's BSkyB takeover
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- ^ [11], FT - Cable should call Murdoch to heel
- ^ [13], The Guardian: David Puttnam - Our Democracy is under threat if Murdoch wins control of Sky
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- ^ Pilkington, Ed (24 April 2011). "Avaaz – the online activist network that is targeting Rupert Murdoch's bid". The Guardian. London.
- ^ a b [15] Archived 24 July 2010 at the Wayback Machine, Rupert Murdoch's News Corp bides time on Sky bid
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- ^ "Ofcom refers Pay TV movies to Competition Commission". Ofcom. 4 August 2010. Archived from the original on 6 August 2010. Retrieved 4 August 2010.
- ^ "Sky making 'excessive profits' from movies". Digital Spy. 8 February 2011. Retrieved 8 February 2011.
- ^ Garside, Juliette (25 July 2011). "BSkyB stranglehold on Hollywood movies could be at risk". London: Guardian News and Media Limited. Retrieved 28 July 2011.
- ^ Halliday, Josh (19 August 2011). "BSkyB told to weaken stranglehold on Hollywood movies". London: Guardian News and Media Limited. Retrieved 19 August 2011.
- ^ a b Sweney, Mark (23 May 2012). "BSkyB to face no action over TV film monopoly". London: Guardian News and Media Limited. Retrieved 23 May 2012.
- ^ Sweney, Mark (20 April 2012). "BSkyB's hold on pay-TV movies should be broken, says Ofcom". London: Guardian News and Media Limited. Retrieved 23 May 2012.
- ^ "Sky's movie strength cleared by Competition Commission". BBC News. 2 August 2012. Retrieved 2 August 2012.
- ^ McCabe, Maisie (2 August 2012). "Sky escapes pay-TV film restrictions". Brand Republic. Retrieved 2 August 2012.
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