BBC partnerships in doubt as regulator bans joint venture

The Competition Commission has dealt a blow to the BBC’s partnership plans by blocking a proposed joint venture video tie-up with ITV and Channel 4.

The regulator ruled this morning that online TV service Kangaroo, which had been expected to launch last autumn with thousands of hours of TV programming, was a threat to competition and “has to be stopped”.

“Without this venture, BBC Worldwide, ITV and Channel 4 would be close competitors of each other,” commission chairman Peter Freeman said.

“We thought that viewers would benefit from better video-on-demand services if the parties competed with each other.”

The ad-funded Kangaroo project, which launched in 2007, would have allowed viewers to watch TV programmes from a large back-catalogue of archive material originally broadcast on ITV, Channel 4 or the BBC.

The BBC has announced a willingness to forge partnerships with other public service broadcasters, sharing facilities, premises and some non-exclusive news footage, to ease their funding concerns.

The Competition Commission said it was aware of these proposals – which have been welcomed by both media regulator Ofcom and the Government – but its ruling today did not take these partnership suggestions into account.

“We are aware of the various important proposals coming from Ofcom and the Digital Britain project regarding the future of public sector broadcasting and the position of the three companies involved in this joint venture,” Freeman said.

“Our job has been to examine a specific proposal for a particular new and developing market [Kangaroo]. The effects on competition of other, future proposals for public service broadcasters have yet to be examined.”

ITV, Channel 4 and the BBC said in a joint statement that the blocked project was a “missed opportunity” and the real losers were British consumers.

“We are disappointed by the decision to prohibit this joint venture,” the trio of public service broadcasters said.

“While this is an unwelcome finding for the shareholders, the real losers from this decision are British consumers.

“This is a disproportionate remedy and a missed opportunity in the further development of British broadcasting.”

ITV executive chairman Michael Grade added: “We are surprised by this decision because we believed that the Kangaroo joint venture, competing in a crowded online world against dominant global brands, was an attractive UK consumer proposition, free at the point of use.”

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