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Regulatory blow for planned online video service

Plans for a commercial internet video service run by ITV, Channel 4 and BBC Worldwide have been dealt a blow by regulators.

The Competition Commission’s provisional findings on the service – known as Project Kangaroo – conclude that the joint venture “will restrict competition” in the UK’s nascent video-on-demand sector.

Kangaroo is “likely to result in a substantial lessening of competition” in the supply of online content at the wholesale and retail levels, the commission said on Wednesday.

Because ITV, Channel 4 and the BBC controlled a large proportion of UK programming production, it would be hard for any UK online video competitor to match Kangaroo’s “scale or attractiveness”, the regulator said.

But the Commission found that Kangaroo would not lessen competition in online advertising or content acquisition.

“We are concerned that a loss of rivalry between BBCW [BBC Worldwide], ITV and C4C, who are normally regarded as close competitors, could restrict existing and future competition for [video-on-demand],” said Peter Freeman, Competition Commission chairman and chairman of the inquiry group.

“Whatever benefits viewers would gain from this rivalry would clearly be lost.”

In a joint statement, ITV, BBC Worldwide and Channel 4 said: “We will continue to make the case for a service that will be both in vast majority free and non-exclusive, and of great benefit and value to British consumers.”

They added that they “remain committed” to launching Kangaroo next year.

Kangaroo plans to offer catch-up television, broadcast in the last week, as well as programmes from the three broadcasters’ archives, via a service similar to ITV.com or the BBC iPlayer. Most content would be free to view, paid for by advertising. As well a consumer service, it also plans to licence its service to other on-demand sites.

It had originally planned to launch this year, but was referred to the Competition Commission by the Office of Fair Trading in June.

Potential remedies put forward by the Commission include offering access to Kangaroo’s content to other broadcasters and online video services, and limiting its control over catch-up programmes.

The Commission said that if none of the remedies were effective, “prohibition would also be an option”.

Kangaroo said: “We look forward to the dialogue on these and other potential remedies with the Commission over the coming weeks.”

The Competition Commission will receive responses to its proposals before Christmas, with a full report expected before Feburary 8 2009.

Kangaroo’s chief executive, Ashley Highfield, last month left to join Microsoft after only four months in the role.

Источник: Financial Times

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