A regulator Ofcom has slashed the price BSkyB can charge its rivals to screen its sports packages.
It cut the wholesale price for Sky Sports 1 by 24 per cent to £10.63 a month. It means rivals BT and Virgin will be able to undercut Sky and chip away at its vast 9.5m subscriber base.
Both firms have indicated they will offer Sky Sports at very competitive prices and have considered giving the channel away free as part of a bundle including broadband and line rental.
The wholesale price for both premium Sky Sports channels together will be cut by 10.5 per cent to £17.14 – slightly more than the range being discussed in the lead-up to the announcement. Sky will also have to wholesale its HD content but a price was not set. Ofcom says the ruling could lead to an extra 2m consumers of premium TV channels by 2015 and estimated Sky could gain an extra £600m revenue over five years through extra wholesales. However, Sky said the gain could be eaten by its subscribers leaving for cheaper rivals.
In a move described by Sky as a “sop”, the broadcaster has been given the go-ahead to sell its premium content through Freeview, meaning it could reach millions of homes that do not subscribe to its satellite package.
Ofcom shied away from an expected ruling covering Sky Movies but instead referred the matter to the Competition Commission.