BSkyB to ease 'anti-competitive' cable deals after talks with OFT

BY MATHEW HORSMAN

BSkyB, the satellite broadcaster 40 per cent owned by Rupert Murdoch's News Corporation, has agreed changes to its rate card for the sale of television programming to cable companies, following discussions with the Office of Fair Trading.

According to information received by the Independent, the new rate card will give cable companies greater flexibility in choosing which BSkyB programmes they will carry.

A number of cable operators had complained that the original rate card, which was published on 4 May, created a bias in favour of those cable companies that agreed to take all BSkyB's services; they complained that this would lead to higher prices for many of their customers.

Under the new proposals, details of which will be published "shortly", cable operators can accept the new rate card or choose the existing Incentive Discount Scheme, which offers a sliding discount sale depending on the number of BSkyB services selected. Cable operators will be given 30 days following publication of the new rate card to make up their minds.

In addition, long-term contracts signed by BSkyB and the two largest cable companies, Telewest and Nynex, are to be watered down at the direction of the OFT to alter clauses deemed to be "significantly anti-competitive". The offending clauses relate to restrictions on the funding and broadcasting of sports and film programming for cable that directly compete with BSkyB's offerings.

The cable industry had hoped to develop its own stream of programming, particularly sports and movies. But the deals between BSkyB and Telewest and Nynex meant the two biggest cable operators were no longer willing to back the development of competitive programming.

The contracts must be revised by 19 July, according to the OFT's instructions. BSkyB's capitulation on the rate card follows several weeks of pressure from three cable companies, Videotron, General Cable and CableTel, which have argued that the satellite broadcaster was "abusing its prominent position" in the pay TV market in Britain.

The three companies took their complaint to both the OFT and the European Commission, claiming that BSkyB operated as a gate keeper to the pay TV sector through its control of the encryption technology used to scramble and unscramble signals, its dominant position on the Astra satellite and its long term programming deals with Hollywood.

Brussels has indicated it will, not act on the complaint, declaring it to be a matter for British regulators.

The OFT has responded on the issues of the Telewest and Nynex contracts and on the rate card, but is believed unlikely to act on the broader complaints.