The Kangaroo project, backed by a consortium of BBC Worldwide, ITV and Channel 4, known as UKVOD, has submitted a further justification of its proposed video service to the Competition Commission. The proposals are currently being investigated to determine whether they will result in a substantial reduction in competition. So far the Kangaroo consortium seems to have failed to address the key competition issues.
The submission states that “over 90 percent of material will be free to the consumer and funded by advertising”. While it will provide exclusive material, “nearly all of its most popular content… will be non-exclusive”.
The 70-page published position paper omits some of the commercial details and repeats many arguments that the parties have previously advanced. It argues that that concerns that the consortium would drive up prices are unsustainable given that nearly all video material will be free to the end user and that the advertising market is highly competitive. For other transactions it suggests there are already more powerful and better established services.
The paper proposes that there will be no change in the way in which free material is syndicated and in any case, other sites will still have alternative sources of programming.
“There is no market in which the joint venture will materially reduce competition,” concludes the submission. “Rather, the service that will be offered by UKVOD will give consumers a scope of content, quality of editorial and functionality that is unlikely to be available if UKVOD was not to proceed.”
One of the foundations on which their submission rests is that BBC Worldwide Limited, a wholly-owned commercial subsidiary of the British Broadcasting Corporation, now based in the same building, is substantially separate from the publicly funded BBC.
The Competition Commission is charged with deciding whether the joint venture effectively between the three leading broadcasters in the country “may be expected to result in a substantial lessening of competition” in any aspect of the market in the United Kingdom.
In any other market, a joint venture between the three main competitors would undoubtedly raise regulatory concerns.
In the event that the three leading supermarket chains were to agree to collaborate to offer the consumer a single one-stop shop it would no doubt prompt concerns from other retailers. The argument that the joint venture would be simply giving away their products in exchange for advertising might do little to allay their anxieties.
The real competition question that the Kangaroo consortium appears to have failed to answer is whether other parties will have open access to the material that it aggregates or the platform that it provides on fair, reasonable and non-discriminatory terms.
This would be relatively easy to achieve if the parties involved were simply to syndicate their material through an open platform to which any third party could contribute. Such an environment, which would be more typical of the internet in general, would go a long way to addressing concerns over competition.