Cable giant Virgin Media, formerly NTL, has begun legal proceedings in the UK High Court against UK satellite broadcaster British Sky Broadcasting Group.
In March BSkyB withdrew three of its flagship channels from the Virgin Media (NTL) cable network after a dispute over the amount BSkyB was charging NTL to carry its channels. The channels affected are Sky One, Sky News, and Sky Sports News.
The UK media and telecoms regulator, Ofcom, said it would investigate the PayTV market in the UK, amid media industry concerns that the market position of BSkyB is becoming too dominant in the satellite, cable, Freeview, and IPTV mediums. BSkyB currently has 8.4 million pay-TV customers, while Virgin Media has 3.5 million.
Virgin Media said the legal proceedings are aimed at resolving its dispute with BSkyB. It said the proceedings are also seeking a remedy for the onerous rates imposed by Sky for carriage of Virgin Media TV channels on Sky’s own TV service.
Virgin Media said that in January, BSkyB forced Virgin Media TV to accept a reduction of approximately 85% in the fees that it pays for Virgin Media channels such as Living, Bravo and Trouble, despite a significant increase in the channels’ popularity.
In February, Sky attempted to double the fees Virgin Media pays for retailing Sky’s basic channels on the Virgin Media network, despite a reduction in the channels’ popularity of about 20% over the last three years, it added.
Virgin Media said that when it declined to pay such excessive charges because it would not be viable for it to do so, BSkyB refused to continue to supply its channels to Virgin Media. The cable giant also accused BSkyB of aggressively promoting the withdrawal as a reason for Virgin Media customers to switch to BSkyB.
It said that BSkyB has rejected an offer by Virgin Media to resolve these issues through legally binding arbitration by an independent expert.
This dispute is one very specific example of how UK consumers are being denied the benefits of a diverse, dynamic and competitive pay TV market, said Virgin Media CEO Steve Burch. Litigation is obviously a serious step and a last resort but we are determined to have these issues resolved as quickly and fairly as possible.
BSkyB did not agree with Virgin Media’s assessment of the channel dispute. This action is without foundation and is an obstacle to bringing back Sky’s basic channels for Virgin Media customers, said BSkyB COO Mike Darcey. The best and quickest way to give customers what they want is to resume negotiations and we’ve invited Virgin Media to return to the table.