Sky and Ofcom reach interim resolution on sports channel pay dispute

BSkyB and Ofcom have reached an temporary agreement to settle the ongoing sports channel pricing dispute.

The two parties have submitted the terms to the president of the Competition Appeal Tribunal (CAT) to review, who is overseeing Sky’s challenge against Ofcom’s “unprecedented and unwarranted intervention” ordering it to reduce the amount it charges rivals to show its premium sports channels by 23%.

The deal sees Ofcom’s wholesale must offer (WMO) obligation initially applying only in respect of BT, Top-up TV and Virgin Media on digital terrestrial television and cable from May 14. Other services will not be eligible for the pricing offer.

Sky says that BT, Top-up TV and Virgin Media will effectively pay the rate card price for Sky Sports 1 and/or Sky Sports 2, with the difference between that and the relevant WMO price paid into escrow – an account established to hold the funds on behalf of Sky until the consummation or termination of the sports channel deal.

Once the tribunal has concluded Sky’s appeal against the Ofcom report, the CAT will determine the distribution of the monies held in escrow.

In its Pay TV investigation, Ofcom previously said the pay-TV broadcaster must cut the wholesale price at which it sells individual channels Sky Sports 1 and 2 to rivals such as Virgin Media from the current £13.88 to £10.63 per subscriber per month, a 23.4% reduction.

The price of a bundle of the two channels must also be reduced from £19.15 to £17.14, a 10.5% drop, the watchdog adds.

A Sky spokesperson says: “We are pleased to have been able to put forward an agreement which provides substantial protection against the short-term impacts of Ofcom’s decision. We remain fully focused on our substantive appeal, which will be filed with the CAT in due course.”

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