Competition Commission “stops” Kangaroo
The Competition Commission has blocked the launch of Project Kangaroo – the joint video-on-demand service from BBC Worldwide, ITV and Channel 4.
In December, the Commission published a provisional report to say that the proposed service would “restrict competition” in the UK, claiming that the venture would be “likely to result in a substantial lessening of competition in the supply of UK TV VoD content” (see Competition Commission: Kangaroo “will restrict competition”).
The interim report suggested a number of remedies to overcome competition issues, including controlling the way that content is offered to other providers and making material modifications to the venture.
However, the Commission today ruled that none of its potential remedies went far enough to appease competition issues in the UK TV video-on-demand market.
Peter Freeman, chairman of the Competition Commission in its final report on Project Kangaroo, said: “After detailed and careful consideration, we have decided that this joint venture would be too much of a threat to competition in this developing market and has to be stopped.”
According to the Competition Commission, the key problem with Kangaroo is about the control of valuable UK-originated TV content.
“BBC Worldwide, ITV and Channel 4 together control the vast majority of this material, which puts them in a very strong position as wholesalers of TV content to restrict competition from other current and future providers of video-on-demand services to UK viewers,” said Freeman.
In response to the Commission’s final report, the shareholders of Project Kangaroo said: “We are disappointed by the decision to prohibit this joint venture. While this is an unwelcome finding for the shareholders, the real losers from this decision are British consumers.”
However, the report claims that viewers will “benefit from better video-on-demand services if the parties – possibly in conjunction with other new and/or already established providers of VoD – competed with each other.”
Michael Grade, chairman and chief executive of ITV, said he was “surprised” by the Commission’s decision, which he hoped would be pushed through by the CC.
Speaking before the Lord’s PSB Committee hearing last week, Grade said that “seeing Project Kangaroo pushed through” was a key priority for ITV going forward (see Grade tells Lords his requirements for ITV’s future).
However, in a statement released today, Grade said that the growth of ITV.com has proved that the broadcaster’s UK content is “attractive enough to stand on its own” – “we remain focused on our online growth,” he added.
ITV: 020 7843 8000 www.itv.com BBC: 020 8743 8000 www.bbc.co.uk Channel Four: 020 7396 4444 www.channel4.com