BSkyB rejects Virgin Media claims

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BSkyB has hit back at Virgin Media's claims that the satellite company was trying to eliminate its rival with anti-competitive behaviour.

In the latest round of a bitter row between the two companies over the carriage of Sky channels on Virgin's service, R. Murdoch's company has filed a defence with the high court rejecting accusations of unreasonable behaviour as unfounded.

Virgin Media, which is considering a £5.2bn private equity approach, lost the right to broadcast hits such as Lost and The Simpsons after failing to agree on a price for BSkyB's Sky basic channels this year. The cable company, in which Sir Richard Branson is the biggest shareholder, then went to the court accusing its "abusive" rival of engineering the withdrawal of Sky One and other channels from Virgin's network to dent its subscriber numbers. Sky's 114-page response to Virgin's 33-page complaint made available yesterday flatly rejects that.

"The failure of Virgin Media and BSkyB to reach an agreement for the wholesale supply of the Sky Basic Channels to Virgin Media is not the result of any unreasonable conduct on the part of BSkyB, but rather a result of the commercial decisions of Virgin Media," the papers say.

A spokesman for Sky claimed last night that it was offering Virgin the channels for just 6% more but Virgin rejected that. "Virgin Media customers deserve to know that the reason they can't watch Sky basic channels is because Virgin management chose to stop negotiating," he said.

"If there is a change of ownership at Virgin Media, we hope that any new management would take a more rational and credible approach and return to serious commercial negotiations with the aim of restoring Sky basic channels to Virgin Media customers within days."

Virgin Media retaliated by saying that Sky's court defence failed to offer a credible response.

"It seeks to portray their anticompetitive behaviour as a normal commercial negotiation but what it exposes is an entirely arbitrary approach to channel valuation, coupled with a continued use of dominant market power to suppress competition from other content providers and platform operators," said a spokesperson.

"As the dominant player in retail pay TV, Sky has a special responsibility not to harm competition. That is inconsistent with the theme of the defence, which is that Sky can behave as arbitrarily as it wishes."

The cable group says it was initially faced with demands for £55m, twice the amount it had been paying. Sky says it wanted nowhere near double.

Sky, which is facing a Competition Commission inquiry, argues that Virgin decided to spend its money on other projects rather than securing the satellite group's channels. In a related row over the Virgin channels that run on Sky, the cable group has accused its rival of "imposing" a deal to pay the Virgin Media TV division unfairly low fees for channels such as Living and Bravo. Sky says Virgin's account of those negotiations is "selective and partial".

If Sky does not settle, the two are set to meet in court early next year.

Source: Guardian