Duty to deal
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%“.
Chillin'Competition 
Given that Nicolas has used a picture related to the Aspen Skiing case, I’ll take the opportunity to make a point related to that case by resorting to another pic:
At the map below you can see all ski resorts located within a few miles of Aspen Mountain.
Doesn’t it suggest that maybe someone got the market definition wrong??
Alfonso Lamadrid
1 April 2010 at 8:54 pm
As a confirmation of my comment above:
Time after the case was decided by the Supreme Court, Aspen Skiing acquired Highlands (the fourth Aspen mountain and the plaintiff in the case). The acquisition gave Aspen Skiing control over all 4 mountains in Aspen. Nonetheless, it was approved by the DOJ on the grounds of a much wider market definition than that adopted in the refusal to deal case.
Alfonso Lamadrid
1 April 2010 at 9:32 pm