Chillin'Competition

Yesterday, Ofcom  (the UK electronic communications regulators), decided to force Sky Sports to offer its TV packages Sports 1 and 2 to other TV retailers – for example, cable, terrestrial and IPTV – at a wholesale price set by Ofcom.

No doubt this decision will trigger massive controversy, in an area where exclusivity has long been hailed as THE sole efficient business model. I can certainly see an “output enhancing” effect on users (increased  availability to customers). The remedy may thus be good in terms of allocative efficiency.  In addition, one  can anticipate a  downward effect on prices for the acquisition of sports rights. Purchasers will bid lower, for fear of having to share their sports rights later.

My gut feeling: in light of the obscene amounts lately paid by TV channels for sports rights, and of the possibly detrimental snow-ball effects this may have in the long term on sports clubs, Ofcom’s decision does not look too bad.

Thanks to E. Provost for the pointer.

I chose the picture as a reference to the famous Aspen Skiing case.

(Image possibly subject to copyrights: source here)

PS: I am told by a good friend, Chris Brown, that “OFCOM has not in this decision imposed a duty to deal.  Sky already dealt with rivals, including Virgin Media (the subject of a previous dispute), so you can already watch Sky Sports on platforms other than Sky’s; what OFCOM has forced Sky to do in this decision is to reduce the wholesale price it charges to Virgin and others by roughly 25%“.