Virgin Media accuses Sky of stifling competition

LONDON - Virgin Media has submitted papers to the High Court supporting its case that it is the victim of a deliberate strategy by BSkyB to harm its ability to compete in the pay-TV market.

The papers lay out Virgin Media's side of the argument against Sky, which centres on its view of Sky's behaviour during carriage negotiations.

Virgin Media alleges that Sky more than doubled the asking price of the rights for Virgin to carry its basic channel package, and also threatened to pay nothing to Virgin for its channels.

In 2006 Virgin had paid Sky £23.6m to carry its basic channels, including Sky One and Sky News; Sky asked for £48.4m in renewal negotiations in February.

The negotiations ended without a deal, and Virgin's 3.3m subscribers have been unable to watch Sky's basic channels since the end of February.

Virgin also complained about an earlier deal setting the price Sky paid to carry Virgin channels, such as Bravo and Living, this year. Sky had paid £35.6m in 2006, but it twice offered nothing in 2007, and Virgin eventually accepted an offer worth £5.1m.

Virgin says the cut-price deal means its content arm Virgin Media Television (formerly Flextech) will make a loss of £4m this year.

Its case claims Sky's action "was designed to stifle the emergence of greater potential competition ... to strengthen BSkyB's dominant position in the pay-TV retail market and pay-TV purchasing market".

Virgin is fighting for unspecified damages and for the court to force Sky to agree a "non-discriminatory" deal.

Today there will be another development in the TV battle when the Office of Fair Trading and Ofcom publish their recommendations to the government about any action on Sky's acquisition of a 17.9% stake in ITV.

Sky bought the stake in November, provoking anger at Virgin Media's former incarnation NTL, which had been attempting to coax ITV to accept a takeover bid.

Sky is due to file its response to the court next month, but a spokesman said: "This version of events contains substantial factual inaccuracies and omissions, which we will correct in our response. No one should draw conclusions after hearing only one side of the argument."

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