Controversy over Sky's operation of pay TV services on Freeview began in 2006. It was claimed at various times that Sky was operating in an anti-competitive way in the British pay TV market. Similar concerns arose about Sky's procurement, distribution and charging levels of films on its Sky Movies service. Sky was exonerated by the Competition Commission in August 2012. Sky was found to have overcharged for its Sky Sports channels, and was ordered in 2010 to reduce its charges for these channels. Its terms for supplying the sports channels to other companies were also challenged in 2010–11; some of the complaints were upheld by the regulatory authorities, others were not. Another challenge, in 2009, concerned Sky's charges for listing free-to-air channels on its electronic program guide (EPG).
Gordon Brown stated in 2011 that during his term as prime minister (2007–2010), News Corporation attempted to affect government policy with regard to the BBC in pursuit of BSkyB's own commercial interests.
In June 2010, News Corporation launched a takeover bid for the remaining shares in the company. There was widespread opposition to the bid, on the grounds that it would give NewsCorp too dominant a position in the British media. The bid was withdrawn in July 2011 following the News International phone hacking scandal. The British Office of Communications (Ofcom) launched an enquiry that same month to determine whether BSkyB should continue to hold a licence to broadcast. In September 2012, Ofcom ruled that BSkyB could retain its licence.
An attempt by 21st Century Fox (the successor to News Corporation) in December 2016 to acquire the 61% share of Sky that it did not already own led to concerns again being raised as to whether it would give the Murdoch family too dominant an influence over British media. American media conglomerate Comcast entered a rival bid in April 2018, and after an auction, 21st Century Fox no longer has any stake in the company. As of October 2018, Sky UK is now wholly owned by Comcast.
Political corruption On 12 July 2011, former British Prime Minister, Gordon Brown, claimed that BSkyB's majority owner, News Corporation, attempted to affect government policy with regard to the BBC in pursuit of BSkyB's own commercial interests., BBC News, "Brown accuses News International of using 'known criminals,'" Tuesday 12 July 2011 He went further, in a speech in Parliament on 13 July 2011, stating:
"Mr James Murdoch, which included his cold assertion that profit not standards was what mattered in the media, underpinned an ever more aggressive News International and BSkyB agenda under his and Mrs Brooks' leadership that was brutal in its simplicity. Their aim was to cut the BBC licence fee, to force BBC online to charge for its content, for the BBC to sell off its commercial activities, to open up more national sporting events to bids from BSkyB and move them away from the BBC, to open up the cable and satellite infrastructure market, and to reduce the power of their regulator, Ofcom. I rejected those policies.", Hansard: "Opposition Day – Rupert Murdoch and News Corporation Bid for BSkyB," 13 July 2011 – Column 400
As a result of the furore over phone hacking – including all main parties in the UK Parliament agreeing on a motion to block the bid, Independent.co.uk, "Rupert on the run: News Corp's UK future in doubt as MPs turn on Murdoch," Thursday 14 July 2011 and the deal being referred to the Competition Commission, Telegraph.co.uk, "Phone hacking scandal: News Corp forces government to refer BSkyB deal to Competition Commission," Monday 11 July 2011 – the News Corporation takeover proposal for BSkyB was dropped on 13 July 2011., Telegraph.co.uk, "Phone hacking: Murdoch pulls News Corp bid for BSkyB," Wednesday 13 July 2011
In light of the phone hacking revelations, the UK media regulator Ofcom took the decision on 8 July 2011 to be kept informed of the phone hacking investigation and to launch a "fit and proper" test, as a result of BSkyB's majority News Corp ownership (part of its obligations under the UK Broadcasting Act), in order to remain "satisfied that any person (which will include controlling directors and shareholders) holding a broadcasting licence remains fit and proper to hold those licences.", Guardian.co.uk, "BSkyB shares fall £1.8bn on fears about 'fit and proper' Ofcom test," Friday 8 July 2011, FT.com, "Investors' faith shaken in BSkyB bid," Friday 8 July 2011
On 20 September 2012, BSkyB was found "fit and proper" to retain a licence to broadcast by the British Office of Communications (Ofcom). Ofcom stated in its report that "Ofcom’s duty to be satisfied that a licensee is fit and proper is ongoing. Should further relevant evidence become available in the future, Ofcom would need to consider that evidence in order to fulfill its duty."
News Corporation takeover bid 2010
As part of News Corporation – which has a large ownership of the UK newspaper market – BSkyB was highlighted as part of media ownership concerns in September 2010 by Claire Enders, founder of media consultancy Enders Analysis, when she wrote to Vince Cable, UK Business Secretary, in a 20-page letter, Guardian Article – 'Rupert Murdoch's Sky Takeover should be blocked, Monday 13 September 2010 stating that News Corporation's bid for the 60.9% of BSkyB they don't own would dilute media plurality and exercise "too much political influence"., The Daily Telegraph – Enders Analysis founder urges Vince Cable to block Murdoch's BSkyB takeover She also stated any such shareholder arrangement would represent a ""Berlusconi moment" for the UK",, The New Statesman – Cable under pressure to block Murdoch's "Berlusconi" takeover referring to Italy's concentration of media ownership.
This was followed by the same argument from the Financial Times in an editorial,, FT – Cable should call Murdoch to heel who stated "a merger would give Mr Murdoch unfettered power to direct its management and cash flows", FT urges Vince Cable to investigate News Corp's BSkyB takeover and that, consequently, this would "lock out challengers and stifle the diversity of debate." Lord Puttnam also argued the same thing, referring to the Coalition Government's desire to alter broadcast regulation and its links with News Corporation., The Guardian: David Puttnam – Our Democracy is under threat if Murdoch wins control of Sky
Pressure group 38 Degrees began a petition to Vince Cable, arguing that News Corporation (and Murdoch's) proposed shareholding would stifle a "free and diverse UK media" and affect UK broadcasting impartiality rules. , 38 Degrees: Vince – Stand up to Murdoch Global campaigning organisation, Avaaz, also opposed the deal, with hundreds of thousands of its members signing petitions targeting the UK government.
Although the bid was "dropped after only five weeks", Rupert Murdoch's News Corp bides time on Sky bid some media commentators presumed it had been done to "bide time" and that News Corp were "still confident" they could prove their bid was not "a serious threat to competition"., Ofcom to 'review' News Corp bid for BSkyB
In October 2010, a group of media companies – accounting for a third of Fleet Street and the BBC – jointly wrote to Vince Cable, the Business Secretary, to lay out their reasons for the BSkyB share bid being a breach of media plurality. The BBC's contribution to the letter was subsequently attacked in a (News International owned) Times editorial.
Competition and vertical integration Television Ofcom complained that Sky's plan to operate pay TV services on Freeview was "generating serious consumer detriment" and the National Consumer Council call Sky's plan "bad news for consumers," combined with representations from BT, Setanta, Top Up TV, and Virgin Media caused Ofcom to launch an investigation into the "features of the [UK pay TV] market, including control over content, ownership of distribution platforms, retail subscriber bases and vertical integration."
Sky repeatedly used its lawyers to lodge complaints with the soon-to-be-rival YouView service, considered by some to be a delaying tactic in order to promote its own services, especially considering its failure to complain about other services, such as Google TV.
On 13 July 2011, MP Chris Bryant stated to the House of Commons, in the Parliamentary Debate on the Rupert Murdoch and News Corporation Bid for BSkyB that the company was anti-competitive:
"The company has lots of technological innovation that only a robust entrepreneur could to bring to British society, but it has also often been profoundly anti-competitive. I believe that the bundling of channels so as to increase the profit and make it impossible for others to participate in the market is anti-competitive. I believe that the way in which the application programming interface—the operating system—has been used has been anti-competitive and that Sky has deliberately set about selling set-top boxes elsewhere, outside areas where they have proper rights. If one visits a flat in Spain where a British person lives, one finds that they mysteriously manage to have a Sky box there even though it is registered to a house in the United Kingdom."
Films On 4 August 2010, Ofcom asked the Competition Commission to investigate concerns regarding the sale and distribution of subscription premium Pay TV films. Ofcom was concerned in particular that the way in which these films are sold and distributed created a situation in which Sky had the incentive and ability to distort competition. The result for consumers is less choice, less innovation and higher prices. Ofcom couldn't address these concerns fully using its powers and referred them to the Competition Commission. The referral related to two specific films markets. The first concerned the rights to films sold by the major Hollywood studios to broadcast films for the first time on pay TV. And the second concerned the wholesale supply of pay TV packages containing films channels, which are based on those rights. The Competition Commission had a maximum of two years to investigate and reach a decision on the concerns raised by Ofcom.
On 8 February 2011, a working paper published on the Competition Commission website, entitled "Profitability of Sky", said Sky is making "excessive profits" from its Sky Movies service. The media regulator was particularly concerned that Sky's near exclusive control over first-run films from the six major Hollywood studios has given the firm an "incentive and ability to distort competition". The Competition Commission's preliminary findings published over the summer found that Sky has a case to answer. The commission found that the prices at which Sky wholesales its film channels to other broadcasters is too high, Sky's contracts with the six major Hollywood studios mean no rival operators can afford to risk bidding for them and that Sky prevented BT and Virgin Media from developing a business selling films on demand via subscription by warehousing – or buying without using – the exclusive right to let viewers watch films on demand via subscription.