Virgin Media Takes Sky to Court
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Science and Technology > Television
May 16, 2007
marshc01
Virgin Media Takes Sky to Court
Virgin Media (VM) has taken Sky to court in the latest step in the ongoing public row between the two companies. Sky and Virgin Media fell out at the beginning of March over the price to be charged for the carriage of the Sky Basic Channels by the cable TV provider. The two sides failed to reach an agreement before the previous contract expired and as a result VM customers lost the Sky Basic Channels, including Sky One, Sky News and Sky Sports News. The very public fall-out and subsequent channel loss led to customers of Virgin Media both criticising and supporting their own digital TV provider. Some of those who ended up disappointed at losing such channels immediately cancelled their contracts and switched to Sky, whilst others who showed their loyalty to VM were rewarded with discounted contracts and extra services. However, despite no agreement being reached between the two companies, Virgin Media threatened to take Sky to the High Court to resolve the row and now has done so claiming Sky was abusing its dominant market position. Sky has denied doing so and has said that the action was "without foundation" and called on Virgin to resume negotiations. VM claims that Sky tried to double its prices for the Basic Sky Channels. However, Sky says the increase would have cost VM just 3 pence per customer per day. It is not just the price of the Sky Channels which is being challenged. Virgin Media is also challenging the rates imposed by Sky for carrying Virgin's TV channels. It is believed that Sky recently renegotiated the price it would pay for carrying channels such as LivingTV, Challenge and Bravo, before it announced that the price for its own channels to VM would be rising. Virgin Media is hoping that it will be able to get the Sky Channels at a lower price than is being asked for and at the same time increase the price it charges Sky for its own channels to bring them more in line with current market trends. Virgin Media brought the action under the UK Competition Act 1998 and Article 82 of the EC Treaty. "Sky, which accounts for almost 70% of the country's pay TV subscribers, is dominant in the UK Pay TV market and has engaged in a strategy to stifle competition by using its dominance against Virgin Media," the company said in a statement. Sky denied the claims and its chief operating officer Mike Darcey said that they had invited VM to return to the negotiating table and that the services Sky was offering for the higher fee would have meant a "bigger and better choice" for customers. Sky say that along with the Sky Basic Channels they had offered to include Sky Three and Sky Arts along with On Demand and High Definition services to VM customers for the increased fee. "Virgin Media is saving money as a result of this dispute but it hasn't reduced prices. Millions of customers have lost access to the shows they enjoy and it is clear that many resent paying full prices for fewer channels," Mr Darcy added. The case is ongoing.
Guide to TV discusses television options for residential customers, primarily for the UK market. Find out more about getting the best option for your home at Guide to TV.
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