Vir Cantium

I'm right, you know …

Miss! Miss! That Boy Won’t Let Me Play With His Toys!

Suppose you are a supermarket and you want to offer to your customers goods which only a competitor currently sells. You approach them for a deal to buy from them and re-sell in your stores. Why would a competitor allow that? The ‘why’ is irrelevant – it may be that they want to expand their own brand ‘reach’ or simply to increase turnover by selling to a section of the market that wouldn’t otherwise buy their brand or products.

So they strike a deal with your supermarket chain. Clearly, they are still going to look for a mark-up, but they’re entitled to make a profit, so that’s fair enough. If you don’t like the price they are charging then you can always go elsewhere, or accept that you won’t be offering that particular range of products.

Of course, what might happen is that the competitor will laugh at your request and tell you to take a hike. That is their right.

What happens, though, if you aren’t a supermarket but a television broadcaster? In the happy regulated world of broadcasting, there is now a teacher to going crying to when you don’t get your way – they’re called OFCOM. And if the big boy who won’t let you share his toy is not popular – maybe the teachers just don’t like his wealthy parents, say – they will find in your favour and order the other lad to share his toys. In other words, force Sky to share Sky Sports 1 and 2 with other broadcasters like Virgin and BT at wholesale prices to be set by the regulator.

I’m trying to think of a parallel where such discriminatory intervention by the state would actually be justifiable, but am struggling. Sky don’t have a monopoly on sports coverage (some leagues of some sports, maybe, but that’s hardly harmful in any way). They are not the sole supplier of some essential means of survival (ignoring jokes about football “not being a matter of life or death but something far more important than that”).

If Virgin, BT et al don’t like the prices they are being charged – and presumably they feel unable to pass those charges on to customers or advertisers – then either they should be bidding for sporting TV rights themselves, or they can tell Sky to get stuffed. This should have nothing to do with a state regulator.

So what happens next – assuming that Sky doesn’t succeed in their perfectly justifiable legal challenge? Sky reduces their margins, and quite possibly their profits and customer base. That lost profit will have to be made up somehow. Perhaps through lower prices for TV rights? A good thing, some will say; that’s as may be, but something is worth whatever someone is willing to pay for it. In Sky’s case, that someone is the combination of advertisers and subscribers: ultimately, either directly or via proxy, the sports-watching public – the same consumers whose interests OFCOM would no doubt be claiming “deliver benefits” to. I’ll bet there’ll be plenty of football fans complaining when season ticket prices increase to make up for the depressed market in broadcasting rights.

Things may turn out better – Sky may make more money with the wholesale agreements, but if that was the case, wouldn’t they be doing it already? Again, though, the question stands: what the blinking flip has it to do with a government regulator?

And unlike in the real world, Sky won’t be allowed to stop feeding the moaning minnies at Virgin et al. So, having invested in a popular service, Sky are now finding that because those without have shouted loudly enough, the state has come along and forcibly redistributed the fruits of that investment – sorry, that should be “delivered consumer benefits”. How very … socialist.

Now suppose that Sky was charging people for their channels even if they never looked at them, and then threaten then with criminal prosecution if they refused. You’d think they would be throwing the book at them for such extortionate behaviour, no? So how do the BBC get away with it?

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