Pay TV market – Ofcom

Sky, the major satellite TV operator in UK has over 8.2 million customers while its main rival Virgin Media has 3.4 million customers. The recent study of Ofcom on Pay TV market shows the dominant role played by Sky as a broadcaster of sports and movies in recent years.

It is found that more than half of Sky’s expenditure is used for buying rights for sports -programs while nearly one-fifths of its annual budget is spent for its movie programs. Ofcom’s study also shows that majority of sports viewers prefer foot ball matches over other sports as 59% of viewers think that live viewing of football (FAPL) matches is of greater importance than other events like cricket or rugby matches.

Seeing the popularity of live football matches on TV, Sky began acquiring rights for broadcasting live football matches via its channels and this year alone, Sky has bought TV broadcasting rights for 92 matches for a contract period of three years.

Sky has also got exclusive rights to show the premier movies released by studios like Paramount, Sony, Twentieth Century Fox, Universal and Warner Bros. Usually, after 12 months after the theatrical release, Sky can show the movie via its channels – Sky Premiere, Sky Comedy, Sky Action and Sky Family.

As far as satisfaction levels of customers are concerned, we find Sky has 48% of its customers saying ‘they were very satisfied’ while 37 percent of the customers were fairly satisfied with Sky’s TV services. This compares with similar satisfaction levels of Freeview.

There had been a dispute between Virgin Media and Sky over the issues TV rights and broadcasting channel on their platforms. Other leading pay TV operators like BT Vision, Setanta, and Topup TV approached Ofcom and asked the telecom regulator to examine issue related to Sky’s dominance in pay TV market. All these operators raised their concerns over Sky’s business attitude which adversely impacts the pay TV market as well as the choice of TV viewers in the UK.

There are two things that Ofcom will examine and give its report later. Firstly, some operators make their customers to buy their basic TV channels for getting access to premier programs like sports or movies. Secondly, Ofcom may take steps to bring down the dominance of Sky by asking the it to sell its sports broadcast to other operators at an agreed price.