BT Sport is no longer the David to Sky Sports' Goliath. When it launched in August 2013, the underdog TV service weighed heavily on less popular football leagues such as Serie A in Italy and Ligue 1 in France. But BT has slowly expanded, spending large amounts for the Champions League, the Europa League and a highly sought-after batch of Premier League fixtures. That's triggered Ofcom to re-evaluate what's known as a "wholesale must-offer" between Sky and BT. Its final decision, announced today, means that Sky is no longer forced to offer its flagship sports channels, Sky Sports 1 and 2, at a discount to BT.
Such a system was originally devised to promote competition. Sky was dominating the TV market and it was impossible for newcomers to put up a challenge. In part, that was because of Sky Sports -- Sky had the rights to many of the UK's most popular tournaments, which meant it could easily attract new customers and spend the revenue on securing future broadcast rights. Few companies had the funding to put in a bid that could wrestle these rights away from Sky. The worry was that Sky would keep its sports channels locked to its TV platform, making it harder for any cable or satellite TV provider to compete.
That's where the "wholesale must-offer" came in. Since 2010, Sky has been forced to offer its best sports channels to BT at a fixed rate, so it in turn can offer them to its customers. That way, if you're a massive Premier League fan, you still have a choice between Sky and BT for your overarching TV package. Times have changed though, and BT's days as a plucky upstart are long gone. Today's decision by Ofcom means that BT and Sky will now need to agree a new price on their own. While a deal isn't guaranteed, Sky has suggested it still wants to do business with its rival: "As the evidence demonstrates, we are, and have always been, more than happy to make our channels available on other platforms."
BT, meanwhile, says it's "disappointed" in Ofcom's decision:
"We will consider our legal options in the light of this decision and, in the meantime, continue to offer our customers access to Sky Sports 1 and 2."
The worry, of course, is that Sky will refuse to lease its sports channels to BT. While that would discourage some sports fans from buying BT TV, it probably wouldn't have much of an impact on Sky TV's subscriber numbers -- after all, its channels are still available through other TV providers like Virgin Media and TalkTalk. Sky could, however, simply set a price for its channels that BT isn't willing to pay. Then BT could, in theory, decide that its money is better spent securing its own broadcast rights and creating new TV shows. These situations are merely hypothetical, but the fact remains -- Sky Sports is no longer guaranteed on BT's platform. Ofcom has warned both parties, however: "(We) will continue to monitor closely market developments and, if necessary, will quickly step back in."
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