&c1=usa&c2=(none)&c3=The+Guardian&c4=Television+industry+(Media),Digital+media,BBC,ITV,Channel+4,Television+(Technology),Internet,Digital+video+(Technology),Technology,Media,Media+business,Business,Regulators,UK+news&c5=&c6=Owen+Gibson,+media+correspondent&c7=2008_07_01){kind=small}
- The Guardian, Tuesday July 1 2008
Ambitious plans for an online video on demand service offering more than 10,000 hours of classic TV shows from the BBC, ITV and Channel 4 were hit yesterday by a decision to refer them to the Competition Commission.
ITV's chairman, Michael Grade, criticised the decision on the project, known as Kangaroo, saying it would put British broadcasters at a disadvantage compared with American rivals. There was a "serious problem" with competition regulation in the UK, he said.
Some rival broadcasters, including BSkyB, had complained that the launch of Kangaroo risked skewing the market.
The Office of Fair Trading, which referred Project Kangaroo to the commission, made a comparison with the recent acquisition by Amazon of the DVD rental service Lovefilm, saying that that merger was satisfactory because there would be enough alternatives for consumers. It said that there was not yet enough evidence to make a similar judgment on Kangaroo.
Yesterday Grade said that the OFT's move showed up a "serious problem", with UK regulation allowing global rivals to steal a march on domestic broadcasters. The regulatory framework "seems unable to take the most important interest into account - that of British viewers", he added.
Grade, who has been battling a falling share price and a looming advertising downturn, said that Kangaroo was being delayed at the 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".
The launch of the joint online venture was announced in November and its new chief executive, Ashley Highfield, the former BBC director of future media and technology, is due to start work today. The scheme, which aggregates programming from all three broadcasters, will now be postponed after the OFT announced that the commission would have 24 weeks to consider the case and collect evidence.
Apple's iTunes store already offers movie rentals in the UK and has signed deals with BBC Worldwide, ITV and Channel 4 to offer downloads of television shows. With global distribution now a reality, broadcasters view it as both a threat and an opportunity.
Executives from Channel 4 and BBC Worldwide, the commercial arm of the corporation, were publicly less combative and remained confident that the new service would eventually be passed with a minimum of restrictions.
When the launch was announced last year, BBC Worldwide's chief executive, John Smith, said the development was partly motivated by a fear of repeating the mistakes of the music industry, when big labels allowed Apple to corner the market in online sales.
