ITV hits out over web video ruling

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ITV yesterday accused the Office of Fair Trading of handing the UK's nascent online video market to Apple and Google as the body referred its proposed video-on-demand joint venture with BBC Worldwide and Channel 4 to the Competition Commission.

The referral of Kangaroo will delay a service that would have brought together archive programming from all three broadcasters into a single website while the Competition Commission undergoes a 24 week review. Kangaroohad intended to launch in the autumn.

The venture had been held up "at the very same time that non-UK companies like Google and Apple are free to build market-dominating positions online in the UK without so much as a regulatory murmur", argued Michael Grade, ITV's executive chairman.

Companies responsible for 90 per cent of all investment in original UK production needed "a level playing field", he said. "Companies . . . who financially contribute virtually nothing to the UK creative economy, are trying to use a narrow regulatory remit to exploit our investment at little cost or risk to themselves."

An OFT statement highlighted concerns about a concentration of market power, saying the joint venture could charge higher prices in syndicating content to wholesale customers or raise prices paid by customers downloading content.

Tom Betts, commercial and acquisitions director for ITV, said the three companies' syndication deals with "closed" platforms such as British Sky Broadcasting's satellite service or Apple's iTunes would be unaffected.

"Open syndication" to other online video platforms such as Joost, however, would be co-ordinated through the joint venture, to be led by Ashley Highfield, the BBC's former head of new media and technology.

Virgin Media, BBC Worldwide's partner in the UKTV channels, welcomed the referral, saying: "Although a lot of details of the proposed merger are yet to be clarified, we've made clear to the OFT that we believe it potentially raises important competition issues."

The OFT said it referred the joint venture to the Competition Commission because the partners had been unable to supply evidence as to whether Kangaroo's future pricing or its free-to-view offer would be constrained by competition from other sources. The Competition Commission would have greater powers, an OFT spokesman noted, including the ability to compel people to give evidence.

Mr Betts said no one had held back evidence: "The reason they haven't got evidence is that this is a brand new market with very little evidence available to them."

John Smith, chief executive of BBC Worldwide, the BBC's commercial arm, said any delay would be most felt by "consumers who are hungry for Kangaroo's video-on-demand service", but added that he was confident that the proposal would not stifle competition.

Shares in ITV closed at a new low, down almost 6 per cent at 44.7p after a Deutsche Bank downgrade that said the Kangaroo project would generate about £4m of losses for the broadcaster this year.


Source:FT

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