Project Kangaroo, the commercial on-demand web TV service being developed by BBC Worldwide, ITV and Channel 4, will be investigated by the Competition Commission amid concern that it could stifle rival online efforts.
The probe will run for up to 24 weeks, and could mean the joint venture is forced to supply competing services with content at capped prices. ITV said today the launch of the "one stop shop" for UK online TV would be delayed by the Competition Commission's evidence gathering.
The Office of Fair Trading (OFT) today referred Project Kangaroo to anti-trust scrutineers following submissions from Sky and Virgin Media. They argued that the three main terrestrial broadcasters could use their public service programme making subsidies to unfairly dominate the TV audience and advertisers on the web.
The OFT agreed that Project Kangaroo's exclusive access to publicly funded TV warrants further investigation. The Competition Commission will look at whether "the concentration of these important and competing libraries of UK TV programming may give market power to the joint venture".
In its statement, the OFT speculated that Project Kangaroo might be able abuse that power to inflate prices and restrict how consumers are able to access shows online.
ITV chairman Michael Grade criticised the OFT's decision. "While I understand that the Office of Fair Trading is carrying out its statutory obligations," he said in a statement, "there is a serious problem with a regulatory framework that seems unable to take the most important interest into account - that of British viewers".
"This venture has been delayed by a reference to the Competition Commission, at the very same time that non-UK companies like Google and Apple are free to build market-dominating positions online in the UK without so much as a regulatory murmur."
He charged that ITV, the BBC and Channel 4's broadcasting rivals were trying to piggyback on their investment in web TV while contributing virtually nothing to the UK's creative economy.
When Project Kangaroo does eventually emerge it'll be run by the BBC's departing new media chief Ashley Highfield, reportedly under the monicker "SeeSaw". Don't expect it to surface until 2009. ®