OFT Gives Green Light To Media Mergers

The new year got off to a positive start for some of Britain’s largest broadcasters, as the Office of Fair Trading gave the thumbs up to the merger of NTL and Telewest, as well as BSkyB’s acquisition of Easynet just days before 2006 began.

Announcing its decision, the OFT stated that “Both cases relate to the emergence of Digital Subscriber Line (DSL) as an alternative means to provide ‘triple-play’ (pay-TV, internet and telecommunications) services,” and that “the test for merger reference to the Competition Commission is not met in either case.”

In the case of NTL and Telewest’s merger, the government watchdog ruled that the companies’ respective local networks do not overlap in any areas except those which are already closely competitive with other providers.

The OFT also ruled that concerns over the combined company’s ability to withhold supply of Flextech content to DSL rivals, or use its power to block the supply of third party pay-TV content were unfounded due to “Flextech’s relatively low share of viewers, together with the availability of alternative content.”

Elsewhere, BSkyB’s takeover of Easynet is expected to benefit the company’s customers, enabling a triple-play of services in which it currently has no offering.

“Competition between Sky and Easynet is currently insignificant but third parties have raised concerns about the potential for Sky blocking the supply of pay TV content to its emerging DSL rivals,” the watchdog stated. However, the OFT dismissed such fears, explaining: “Sky already has the potential to do this and the merger does not materially alter its incentives.”

Office of Fair Trading: www.oft.gov.uk