Protecting free TV
Competition policy is to be used to ensure that free-to-air broadcasting should not be allowed to wither and die.
That is the kernel of the Competition Commission’s provisional ruling that BSkyB’s acquisition of a 17.9 per cent stake in ITV would result in a substantial lessening in competition and operates against the public interest.
The Commission has effectively taken BSkyB as a proxy for pay television and ITV as the proxy for free-to-air services.
It believes that BSkyB has an incentive to prevent ITV making the kind of substantial investments that would allow free-to-air to thrive as we move towards and through “digital switchover” (when the traditional analogue broadcast system is turned off for good).
The Commission has also concluded that BSkyB’s 17.9 per cent holding gives it the means to frustrate such investments by ITV.
It charges, for example, that BSkyB might use its voting rights at ITV to
a) Reduce ITV’s investment in new programmes
b) Limit ITV’s ability to bid for spectrum that would allow ITV to provide high-definition television in competition with Sky’s current monopoly of HDTV
c) Frustrate takeovers by ITV that would increase its competitive strength.
The Commission adds that BSkyB would somehow be able to mess up attempts by ITV and the BBC to launch a free satellite service as a result of its “indirect influence due to its industry knowledge and standing” (this latter charge by the Commission is very odd).
What does it all mean?
Well BSkyB will not be able to use all - or perhaps any - of the votes attached to its 17.9 per cent stake. That could mean that it is forced to sell all or some of its stake – which would be painful for BSkyB, since it paid 135p a share compared with the current ITV price of 104p. The book loss on the holding right now is over £200m.
Or BSkyB could be forced to give formal undertakings that it won’t use the voting rights attached to its shares, thereby forcing it to be a passive investor. That might not be wholly satisfactory to ITV, since the stake would effectively become dead money, in the sense that BSkyB could not be relied upon to provide precious new capital in a rights issue (if such were needed).
So it’s quite big stuff from the Commission. It’s a slap to BSkyB just in case it ever harboured the thought that it could thrive by deliberately sabotaging free-to-air TV.
Oh, and for other companies in whatever industry, there appears to be a new rule that a stake of 17.9 per cent in a rival gives almost as much control as owning the whole thing – which is the equivalent in the takeover game of writing a new offside rule.
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If BSkyB own 17.9% of ITV they have full access to all of the accounts and future directions of ITV. As they are a competitor to ITV (they own and operate some channels) they could use this information to affect how ITV operates. As an example they could know how much ITV are prepared to pay for a particular program or broadcast rights and then bid accordingly.
If BSkyB is planning to buy ITV as its production arm for both free to air and for pay TV, then I could understand the action that they are taking. If, as it appears, it is being used as a blocking stake then it is only their interest!
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I think it is too late to keep Freebies intact - by taking non regulated and free market route, we have already denied the good of socialism?
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The Commission adds that BSkyB would somehow be able to mess up attempts by ITV and the BBC to launch a free satellite service as a result of its “indirect influence due to its industry knowledge and standing” (this latter charge by the Commission is very odd).
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What do you find strange about the fact that Sky would deliberately sabotage competitors' operations?. Sky would lean on manufacturers of satellite service equipment and threaten to cancel their existing contracts if they also started making equipment for competitiors. Dirty tricks are standard operating procedures for Sky.
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How can there be free TV when the TV license is still compulsary?
Until the TV license is scrapped and BBC finds a fairer way of funding itself there will be no such thing as free TV in the UK.
Not to mention the TV license enforcement peeple wasting £150m a year harrassing people who do not have a TV license, more than half of which, like myself, have no need of one.
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I just find it so depressing that TV is so bad. We have Sky and the advert breaks now seem more numerous and last longer, they are so intrusive to the enjoyment of the programmes. We have reduced our TV viewing and now spend more time watching DVDs of films and good TV series like the West Wing.
The BBC needs to improve it's programmes as well
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> I think it is too late to keep
> Freebies intact - by taking non
> regulated and free market route,
> we have already denied the good
> of socialism?
I think we'll see a few more of the disadvantages of Thatcherism emerging before the next round in that battle. These things seem to work in cycles of a half century.
Other economic trends may emerge, in response to important issues like climate change and internet politics. We had our first tele in the mid 1950’s, and I’d expect society in 50 years time to be as different as the 50’s seem to today’s youth. The only constant is that the past always seems better than the present and far better than the future!
In particular, the urge to "tune in, turn on and drop out" is becoming irresistible to the victims of low wage capitalism.
So surviving without working has become a major growth area, and it looks likely to increase due to the adverse effects of "work" and "machinery" on the climate. The "dropouts" will want to "tune in and turn on" to free TV like never before, so might it be a good time to buy ITV shares?
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Just a shame its taken so long to come to what was a fairly obivous conclusion. Unfortunately, the time lag means the damage may already be done.
In my opinion Sky should be forced to sell ASAP in a way that will not allow it to influence who can take future control of ITV (i.e. Rumours of a swap for Five with RTL should not be allowed to come to fruition either)
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This is a classic case of moving goalposts.
A cap was already placed on the maximum percentage that BSkyB could hold. BSkyB has operated within that cap, playing by the rules, and is now being punished for doing so.
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> I think it is too late to keep
> Freebies intact - by taking non
> regulated and free market route,
> we have already denied the good
> of socialism?
I think we'll see a few more of the disadvantages of Thatcherism emerging before the next round in that battle. These things seem to work in cycles of a half century.
Other economic trends may emerge, in response to important issues like climate change and internet politics. We had our first tele in the mid 1950’s, and I’d expect society in 50 years time to be as different as the 50’s seem to today’s youth. The only constant is that the past always seems better than the present and far better than the future!
In particular, the urge to "tune in, turn on and drop out" is becoming irresistible to the victims of low wage capitalism.
So surviving without working has become a major growth area, and it looks likely to increase due to the adverse effects of "work" and "machinery" on the climate. The "dropouts" will want to "tune in and turn on" to free TV like never before, so might it be a good time to buy ITV shares?
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Sky have used dirty tricks for years. They have competition now, with Virgin, Setanta and Freesat. They need to be put in their place. Digital terrestrial should be Sky free.
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Without mentioning a certain European Directive on the subject on the one hand, and the Licence fee on the other...
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Robert
I cannot see the logic of yout last paragraph assering that this ruling changes the "offside rule".
The Competition Commission's provisional ruling surely applies ONLY to the Sky / ITV situation. It can't be read across as a general ruling on controlling shares and de facto monopoly, still less on takeover policy generally.
Different markets have different circumstances. The CC will have to continue to to judge each case on its own merits.
And anyway television is not a straightforward capitalist market - there are huge barriers to entry and much more state management of what is and is not allowed than (say) the pharmaceutical industry or motor manufacture or financial services.
"Competition" in TV has a different meaning than that which applies in the wider economy.
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It seems a shame that the competition authorities felt obliged to have a look at this very sensible action on the part of BSkyB. Ratings were plummeting at ITV and from a management perspective the company was in a complete mess. Along comes Virgin Media spotting a bit of a bargain, willing to help ITV out. Unfortunatley for Virgin Media, the Sky team some them coming. What did Virgin Media do next - cry "foul" to Government. Sky has always made its position clear about its investment in ITV. I can only hope for ITV's sake, that Mr Murdoch is allowed to stay on board in some form be in a position to offer advice if and whn it is needed.
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it more like it be the end for sky for good
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I think you will find some groups get a free license and it is the government not the BBC who have the power on that. Don't forget it also funds this website... plus a lot of the cost of going digital.
Simon Day, there was a very interesting program on this the other night, I don't supose you saw it...
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"How can there be free TV when the TV license is still compulsary?"
Because how bad would it be if you had to pay the license and there were no unscrambled channels to watch without paying for Sky or whoever.
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For many parts of the country it is not possible to get Virgin or Freeview - Sky is the only option.
Running things for the benefit of those living in cities is unfair for those in rural communities relying on Sky.
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Who cares. There's nothing worth watching on ITV1/2/3/4 anyway. Except for the adverts, which contain the only original ideas shown on ITV theses days.
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As we all know there is no such thing as a free lunch and this also applies to television. Anybody wishing to legally watch television in the UK has to pay the highest licence fee in the European Union. This enables the Beeb to live in its Alice in Wonderland world where "talent' like Ross is able to sign up for a 3 year contract allegedly worth £18 million. It also permits the financing of a plethora of new channels most of which do not attract a significant audience. Lets keep this free to air nonsene in perspective and hope that a future commision takes a closer look at the priorities for public sevice broadcasting in the UK and sets parameters for the Beeb which will stop the current melange of gravy train and stupidity. Can Auntie really justify a main news broadcast lasting just 30 minutes at 10.00pm? Where is the room for analysis of current events? It is all very well praising the Beeb for its Planet Earth series and suchlike but its day to day coverage of news and current affairs leaves a lot to be desired bearing in in mind the funding which the public pay.
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"Protecting Free TV"???
Where is this mythical "Free TV"?
BBC and CH4 are paid for by the public via the licence fee and ITV gets revenue from advertisers who in turn get revenue from their products (sold to you and me) eg the price of a can of beans has an element to cover the cost of advertising.
So even though I do not have a TV I'm still paying for ITV even though I do not watch it. That's life though.
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I am happy to pay my licence fee to the BBC.
To judge the BBC on the basis of it's
UK TV programmes alone is folly.
The BBC provides the most extensive and professional free broadcasting service to the World in the World.
Additionally it provides a home for some of the best arts of all types from orchestras to punk, from Shaky to fringe.
Look at their film library available on DVD, need I go on?
Finally your criticicms could be answered by BBC staff in almost every language in the World.
That is what you pay for, use it!
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"The BBC provides the most extensive and professional free broadcasting service to the World in the World".
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So why should it be funded solely by people in the UK?
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'. . .the highest licence fee in the European Union'. I thought we were the only country in the World who paid a licence fee for TV??
And the BBC own all the UK channels, Drama, Food, Style, Gold etc etc and they all show adverts, so there is plenty of funding going in, and from using repeats!
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