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Kangaroo opponents supported by Competition Commission’s interim findings
03 Dec 2008 | 18.08 Europe/London
Project Kangaroo was dealt a potentially fatal blow today when the Competition Commission unveiled preliminary findings which agreed with critics that it could curtail competition in the video on demand (VOD) industry.
The proposed online television service has been set up by BBC Worldwide, Channel 4 and ITV, allowing the country’s largest broadcasters and commissioners to join forces in a single service so viewers do not need to access each channel’s content separately.
It was referred to the Competition Commission in the summer after broadcasting rivals Sky and Virgin Media complained that the joint venture creative an entity that would be so large that it would be anti competitive both in terms of access to content as well as, potentially, the commissioning of new content.
The Competition Commission today agreed as it announced provisional findings that agreed Kangaroo would lead to a “substantial lessening of competition in the retail and wholesale UK VOD market”. The commission also found that Kangaroo “would have the ability and incentive to impose unfavourable terms when licensing domestic content to rivals” and that “in the extreme” Kangaroo might, it found, “withhold content from its rivals altogether”.
The Competition Commission has announced its interim findings with a set of proposals which it believes could remedy the findings and restore competition.
They include loosening licensing arrangements to ensure that outside parties can buy content from the broadcasters at a wholesale level and, in general, limiting the scope of the joint venture to weaken its potentially anti-competitive impact on the market.
The findings were released so that interested parties can respond by December 16th ahead of the final report being published on February 8th. It gives Kangaroo a fortnight to ensure it meets the criteria to allay competition fears or risk an unfavourable ruling from the Competition Commission which would see it closed before it ever launched.
The ruling is a blow to the proposed Kangaroo service as it comes within a month of it losing Chief Executive Ashleigh Highfield to Microsoft. At the time he said the decision had nothing to do with the Competition Commission’s investigation but was purely down to running Microsoft’s online and consumer divisions in the UK being too good an opportunity to turn down.
The proposed online television service has been set up by BBC Worldwide, Channel 4 and ITV, allowing the country’s largest broadcasters and commissioners to join forces in a single service so viewers do not need to access each channel’s content separately.
It was referred to the Competition Commission in the summer after broadcasting rivals Sky and Virgin Media complained that the joint venture creative an entity that would be so large that it would be anti competitive both in terms of access to content as well as, potentially, the commissioning of new content.
The Competition Commission today agreed as it announced provisional findings that agreed Kangaroo would lead to a “substantial lessening of competition in the retail and wholesale UK VOD market”. The commission also found that Kangaroo “would have the ability and incentive to impose unfavourable terms when licensing domestic content to rivals” and that “in the extreme” Kangaroo might, it found, “withhold content from its rivals altogether”.
The Competition Commission has announced its interim findings with a set of proposals which it believes could remedy the findings and restore competition.
They include loosening licensing arrangements to ensure that outside parties can buy content from the broadcasters at a wholesale level and, in general, limiting the scope of the joint venture to weaken its potentially anti-competitive impact on the market.
The findings were released so that interested parties can respond by December 16th ahead of the final report being published on February 8th. It gives Kangaroo a fortnight to ensure it meets the criteria to allay competition fears or risk an unfavourable ruling from the Competition Commission which would see it closed before it ever launched.
The ruling is a blow to the proposed Kangaroo service as it comes within a month of it losing Chief Executive Ashleigh Highfield to Microsoft. At the time he said the decision had nothing to do with the Competition Commission’s investigation but was purely down to running Microsoft’s online and consumer divisions in the UK being too good an opportunity to turn down.