OFT investigation on BSkyB/ITV: BECTU comments

19 January 2007

  1. BECTU is the trade union for workers (other than performers and journalists) in the audiovisual and live entertainment sectors. We are a recognised trade union within ITV plc; we have a significant number of members in BSkyB; and we have an extensive membership throughout the rest of the broadcasting and independent production sector. We therefore have a close interest in this OFT investigation.
  2. We note that the OFT received a formal complaint concerning BSkyB's acquisition of a 17.9% shareholding in ITV and has reached a provisional view that a relevant merger situation as been created as a result of Sky acquiring material influence over ITV - leading to the invitation to submit views on whether this may result in a substantial lessening of competition within relevant markets so as to justify reference to the Competition Commission.

    Lessening of competition

  3. BECTU's view is that a reference to the Competition Commission is certainly warranted in his case. We note the following relevant points of concern supporting this conclusion:
    • BSkyB is 39% owned by News Corporation, which also has newspaper interests amounting to 32% of total UK weekly newspaper sales. This is, in our view, a degree of concentration of media ownership that is already excessive - not just on economic grounds but also on democratic and cultural grounds. A further extension of New Corporation influence into ITV would be highly undesirable.
    • The merger would allow BSkyB privileged access to ITV strategic policy thinking in areas of direct commercial interest to Sky, for example: news supply; Freeview and Freesat; bidding for sports and film rights; the TV advertising market (noting that BSkyB and ITV between them control over 50% of the market); the ownership and any future disposal of production assets.
    • Specifically in terms of Freeview, BSkyB has a direct interest in promoting its primary model of subscription TV as a direct alternative to the free-to-air model of Freeview.
    • More generally, influence on ITV's multichannel business would offer a potentially valuable source of cross-promotion and complementary scheduling for Sky's own channels, which are no longer as dominant as they were.
    • Furthermore, and without having any brief for ntl, we can only note that the effect of BSkyB's ITV share acquisition has undoubtedly been to block ntl's own bid for ITV, which could potentially have resulted in a cable/ITV alliance offering a greater commercial challenge.

    News supply

  4. On news supply, we are already concerned about the implications of recent trends affecting ITN, including the loss of the news contract for Five to BSkyB and the closure of the ITV News channel. BSkyB's acquisition of a significant ITV stake would have clear implications for the forthcoming discussions on the ITV news contract - with the ultimate fear that it would be awarded to BSkyB.
  5. We are in distinct danger of moving from a system of 3 major news providers to just 2 (BSkyB and BBC) - with a potentially detrimental affect on our pluralist democracy. This is especially significant in the light of News Corporation's newspaper interests and the overtly right-wing rather than impartial agenda of Fox News in the US.

    Public interest considerations

  6. For the reasons set out above we also believe that BSkyB's acquisition of ITV shares would have broader public interest considerations warranting a DTI reference to Ofcom for a full investigation of these matters.
  7. We have many additional concerns about BSkyB as an employer - including extensive evidence of unfair practices by the company in relation to our earlier campaign for trade union recognition. Such evidence was quoted both by BECTU and the TUC in responding to a DTI consultation on such matters - and the Government has subsequently introduced a Code of Practice governing this issue.
  8. We accept that these specific concerns fall outside OFT's remit but we believe that this broader context is relevant as background to the current investigation.
  9. In conclusion, we believe there is an overwhelming case justifying the OFT in referring this issue to the Competition Commission for further investigation.
Last updated 1 February 2007