The UK government has launched an unprecedented inquiry into whether the influence of Rupert Murdoch’s pay-TV empire in Britain is against the public interest. The decision, the first of its kind under legislation passed in 2002, was hailed as a ‘pivotal moment in British broadcasting’ by MPs. However it certainly provoked an infuriated reaction from BSkyB executives.
BSkyB is of the view that it had complied with cross-media ownership rules, it further pointed to its record of broadcasting innovation and hinted that the inquiry could limit investment in UK companies.
On the other side of the story, Virgin Media is embroiled in yet another squabble with British Sky Broadcasting Group, this time disagreement is over how much Sky charges Virgin for its basic television channels. However, the recent row reaches beyond money. The case involves a question whether the U.K. satellite operator is using its dominance of U.K. pay-TV programming to squeeze rival distribution networks.
Virgin Media, a cable operator, has been on the offensive since last year, when BSkyB spoiled its bid for broadcaster ITV by taking a 17.9 percent stake. In the meanwhile, Rupert Murdoch’s BSkyB found itself under pressure on two fronts today after its controversial stake in ITV was referred for an unprecedented investigation over public interest issues.
The decision to order a public interest investigation over BSkyB’s 17.9 percent holding in its rival commercial broadcaster is almost certain to antagonize the media baron Rupert Murdoch, the company’s chairman. The case has political dimension as well and it can create headache for Gordon Brown, the chancellor.
