[Chris]

Originally Posted by altis

It's a brave man, or indeed organization, that squares up to Rupert Murdoch. He's a very shrewd operator and has seen off OnDigital/ITV digital and more recently Setanta over their sports deals.

I'd disagree on this point - since the EU intervened and forbade the FA to sell the rights as a single package to any one broadcaster, Setanta has had the opportunity to thrive. Nobody could fight the financial muscle of Sky while there was one single bidding war over one single channel package, but the first time the split packages came up, Setanta won two of them. That means they outbid Sky on one of the packages, because Sky could legally have taken five of the six on offer but they only got four.

What has happened here is that Setanta took a gamble on the amount they bid second time round, and they got it wrong. Sky outbid them - not by a lot, but hey - and got that fifth package. Result, Sky has five out of six packages, and Setanta, with only one package, is a far less attractive prospect for investors. No investors, no cash coming in, no way to pay for current commitments ... this is a disaster of their own making.

ITV Digital is a little different. For some reason they thought masses of people would want to pay to see lower division football. They bid a fortune for the games and couldn't then pay for it (because people failed to subscribe in droves). The scale of their financial mismanagement was so great that it almost brought the entire digital terrestrial system down with it, forcing the BBC to lead a consortium to develop Freeview as a replacement.

I'm not denying Murdoch has a ruthless streak in him when it comes to business, but in both these cases the operators that failed really were the authors of their own misfortune.

Was the spat between Sky and Virgin many months (years?) ago over charging for channels ever resolved?

Yes. And Virgin won it convincingly. Sky went right out on a limb because it believed Virgin would blink first. But Virgin Media didn't blink and Sky eventually had to concede that it's business needed to distribute Sky channels via cable more than Virgin Media's business needed to have the Sky channels on cable.

When Sky came to its senses, not only was it forced to sell access to its channels for far less than it had been asking, but it also had to renegotiate the deal by which Virgin's channels are carried on satellite. Whereas Sky started out with the proposition that its channels were worth about 10 times more than Virgin's, the final deal values them equally.

If Ofcom had any teeth, or indeed balls, they'd force Sky to split up and separate the content from the distribution. IMHO, that's the only way to free up Sky's stranglehold of the TV market.

They would have to prove routine, systemic abuse of the market that could only be remedied by splitting up Sky in order to impose that, and much as Sky is seen as a bully I don't think they could manage it. I think what they have proposed today is as much as they think they can take before a judge with any chance of winning the argument. Be under no illusions, they will have been fully expecting Sky to kick against this and will only be proposing as much as they think it is possible to achieve.