UK: Competition In The Television Sector

Last Updated: 19 April 2007
Article by Rosemary Choueka

Originally published in Lawrence Graham's 'SmartLaw' newsletter, March 2007

© Lawrence Graham LLP

The rapid pace of change in communications technology means that soon it may no longer be appropriate to look at television programming in isolation. This is making the regulators’ lives a lot more challenging, as the fall-out from the conjoining of BSkyB and ITV has highlighted. Convergence is no longer just a theory. Anyone who wants to watch programmes traditionally found only on the telly can now turn to their computer instead, or reach for their mobile. On the PC desktop there has been a burst of new offerings, from the near-legendary YouTube to the extensive Internet content uploaded by television networks like the BBC, whose iPlayer, for example, offers ondemand access to a wide range of downloadable television and radio. In the mobile telephone sector 2005 saw a range of channel operators trying out TV on mobile handsets. Deals between some of the biggest names in both industries were the result.

Better than soap

Against this background of technological change, recent corporate developments in the sector have been particularly striking. At the end of November 2006 BSkyB announced that it had acquired a 17.9% stake in ITV Plc for £940 million (equivalent to 135 pence per share). ITV announced simultaneously that it was rejecting a takeover bid by NTL at 120 pence per share, saying that the offer was too low to merit consideration.

Richard Branson, holder of an 11% stake in NTL, promptly complained that the acquisition by BSkyB of a stake in ITV was anti-competitive, arguing that it should be considered by the Office of Fair Trading (OFT) under the UK merger control rules. Following Branson’s comments, communications regulator Ofcom announced that it was considering whether or not there had been a change of control over one or more of ITV’s licences and invited ITV and BSkyB to comment on this. NTL’s subsequent submission to the OFT also argued that the OFT should examine the BSkyB acquisition. On 6 December 2006 NTL confirmed that it would not make another bid for ITV as long as BSkyB retained a blocking stake.

He’s got previous

The story of these competing bids for ITV raises a number of interesting issues. By way of background, it should be noted that BSkyB, ITV and NTL have already got ‘form’ with the OFT. In December 2002 the OFT investigated whether BSkyB had breached the Competition Act 1998 by abusing a dominant position. It found that whilst the company was dominant in the wholesale supply of certain premium sports and film channels, there had been no abuse. In February 2003 the OFT recommended that the proposed merger of Carlton Communications Plc and Granada Plc (which came together to create ITV Plc) should be referred to the Competition Commission because it raised concerns principally in relation to the sale of TV advertising. The Competition Commission agreed and permitted the transaction to proceed only on the understanding that the parties agreed to a number of remedies, the most important being that all of the existing advertising customers of both parties should be allowed to renew their pre-merger contracts with the terms unchanged. In December 2006 the OFT cleared NTL’s acquisition of Telewest Global Inc; the two companies had been major competitors in the pay-TV, telecommunications and Internet access sectors.

Pluralism and control

Both Ofcom and the OFT are now looking at the latest ITV deal. Under the Communications Act 2003 Ofcom must review the likely effects of any change in the control of any company that holds a licence to provide Channel Three services. The Act also provides that such a company cannot merge with one that owns 20% or more of the national newspaper market. These provisions form part of a network of rules designed to maintain pluralism in the ownership of the various national media. It is well known that Rupert Murdoch, owner of BSkyB, also has a large share of the national newspaper market through News International. But, since BSkyB has acquired only a 17.9% stake in ITV, it seems unlikely (though not impossible) that the acquisition will be found to have resulted in a change of control of ITV.

The OFT applies a different analysis. Under the Enterprise Act 2002 it may consider any "relevant merger situation" and investigate whether it has, or may be expected to, result in a substantial lessening of competition within any UK market or markets. If so, it must then refer the matter to the Competition Commission for a full investigation. A relevant merger situation exists when two or more entities are brought under common ownership or control and where either: (1) the UK turnover of the target is greater than £70 million; or (2) the parties together have a share of supply in the UK greater than 25%. In the present case ITV’s UK turnover is above the £70 million threshold so the issue at stake is whether or not it has now come under the control of BSkyB.

In this context ‘control’ does not necessarily mean a stake of more than 50%; it instead depends on the full circumstances surrounding the acquisition. In some instances the OFT has found that control (in the sense of material influence) has been acquired with stakes as low as 15% in light of other factors in the overall deal. NTL has argued to the OFT that the 17.9% stake acquired by BSkyB could carry more weight than the figure alone implies because only two-thirds of ITV investors typically vote at annual meetings. This argument appears to have had at least some impact at the OFT; on 12 January this year it announced that it believes that it may have jurisdiction under the merger control rules and issued a formal invitation to comment.

The third relevant piece of legislation gives the Secretary of State for Trade and Industry the power to intervene (under section 42 of the Enterprise Act) in "relevant merger situations" involving media companies where he considers that there are public interest grounds for doing so. The grounds are laid out in the legislation and relate to the need to maintain pluralism and quality and a commitment to obtaining broadcasting standards. Where the Secretary of State issues such a notice, the OFT must report to him on the competition aspects of a transaction and Ofcom must report on the public interest considerations. The Secretary of State must then decide whether to make a reference to the Competition Commission. On 26 February 2007, the Secretary of State used his powers under section 42 for the first time, to intervene in the BSkyB/ITV deal. The OFT and Ofcom must report to him by 27 April 2007, the task for Ofcom being to consider the need for sufficient plurality of media ownership in the context of this deal.

The ITV situation thus provides the opportunity to consider two fascinating aspects of this fastchanging industry: media pluralism and the market(s) in which competition takes place.

The media ownership rules have prompted two major reviews in recent months. In November 2006 an Ofcom report concluded that at present there is no need to review the current rules. Shortly after, in January 2007, the European Commission announced a three-step programme to achieve an understanding of the measures necessary to ensure media pluralism. As part of its announcement the Commission noted that, while merger control rules play an important role in preventing the creation or abuse of a dominant market position and in ensuring access for new entrants, they do not replace national media concentration rules and other measures to ensure media pluralism.

Defining the markets in which the parties operate will be particularly challenging. In its decision on the NTL/Telewest merger the OFT touched on the possibility that the increasing tendency to bundle pay-TV, telecommunications and Internet services into a single ‘triple play’ package (or ‘quadruple play’ if telecommunications is split into fixed and mobile) may create its own frame of reference. It also considered whether the merger could result in co-ordinated behaviour between BSkyB and the merged NTL/Telewest entity in the pay-TV sector to block third-party channels. For the current ITV deal it is likely that the OFT will have to probe these issues in greater depth. The deal could have a number of other anti-competitive effects, particularly in the provision of news, bidding for sporting rights and ownership of Freeview. The competition authorities have already shown a strong desire to keep the sports rights bidding process unencumbered by cross-shareholdings. ITN (in which ITV and BSkyB each has a 20% stake) is BSkyB’s main commercial news rival. Similarly, Freeview was set up as an alternative to BSkyB. But now, through its interest in ITV, BSkyB could perhaps exercise influence beyond its original 20% share, and possibly even create an opportunity to run down Freeview.

Whether the regulators, assisted by NTL, will have the ability to halt the advance of the Murdoch media empire remains to be seen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.