Competition concerns over on-demand TV

By James Davey

LONDON (Reuters) - An online television joint venture between broadcasters the BBC, ITV and Channel 4 would restrict competition and could be blocked, the Competition Commission (CC) provisionally ruled on Wednesday.

"The CC has concluded that the joint venture is likely to result in a substantial lessening of competition in the supply of UK TV video on demand content at the wholesale and retail levels," it said in a statement.

The web-based venture, called Kangaroo and first announced in November 2007, would allow viewers to access recently aired programmes as well as archive content. It is part of a push by the broadcasters to reach younger audiences who are turning to the Internet instead of traditional television.

If successful, the service would help win advertising revenue at a time when commercial broadcasters are losing advertising income. Yet its launched originally planned for this year has already been delayed by the CC's scrutiny.

The venture partners expect the majority of content to be free and funded by advertising, but customers will be charged for some content.

As well as providing a retail service to customers, the venture plans to licence its services to other video on demand services on a wholesale basis.

LOSS OF RIVALRY

"We are concerned that a loss of rivalry between BBC Worldwide, ITV and C4, who are normally regarded as close competitors, could restrict existing and future competition for VOD. Whatever benefits viewers would gain from this rivalry would clearly be lost," said Competition Commission Chairman Peter Freeman.