Project Kangaroo blocked by Competition Commission

by Daniel Farey-Jones, Brand Republic 04-Feb-09, 08:30

LONDON - The Competition Commission has put an end to Project Kangaroo, the joint venture between BBC Worldwide, ITV and Channel 4, on the grounds that it would overly restrict competition in the video on demand market.

Is the CC right to axe Kangaroo? **Vote** and have your say

The commission's final report concluded that Kangaroo "has to be stopped" because even the constraints it had considered, such as controlling the way Kangaroo shareholders offer content to other providers, would not have overcome the risk of the BBC's commercial arm, ITV and Channel 4 abusing the position Kangaroo would have given them.

Peter Freeman, chairman of the commission and of the Kangaroo inquiry group, said: "This case is essentially about the control of UK-originated TV content.

"BBC Worldwide, ITV and Channel 4 together control the vast majority of this material, which puts them in a very strong position as wholesalers of TV content to restrict competition from other current and future providers of video on demand services to UK viewers."

In the commission's opinion viewers would be better served if the trio have to compete with each other in the video on demand market.

The decision will please rival video on demand providers Virgin Media, Babelgum and Joost, who have all called on the commission to block Kangaroo.

Kangaroo's shareholders have reacted with disappointment, describing the decision as "a disproportionate remedy and a missed opportunity in the further development of British broadcasting".

Michael Grade, chairman and chief executive of ITV, was surprised by the decision, but said that ITV had its own successful online offering to fall back on.

Grade said: "We are surprised by this decision because we believed that the Kangaroo joint venture, competing in a crowded online world against dominant global brands, was an attractive UK consumer proposition, free at the point of use.

"In the two years since the idea for Kangaroo was born, the success of ITV.com has proved that our UK content is attractive enough to stand on its own and we remain focussed on our online growth.

"We will provide a further update on our online plans with our full year results on March 4".

Kangaroo has been an expensive exercise for the UK's leading broadcasters. A study by Enders Analysis estimated that BBC Worldwide, ITV and Channel 4 have already spent £25m on staff and development costs.

The Competition Commission's rejection also has repercussions for ad agency Fallon, which was awarded the £4m task to launch Kangaroo last month after pitching against six other agencies.

Comments

James Ghani - 04/02/2009

Congratulations to The Competition Commission for this bold and correct decision. The BBC, iTV and C4 should have the confidence in their respective content output to generate sufficient VOD traction. Great programming output from any channel provider across a level 'On Demand' playing field is what I believe in the best interests of viewers, program makers and regulators alike. I fail to see how the proposed consolidated triptych would have benefited anyone other then the newly created layer of private shareholders that would have been established.

Graham Mills - 04/02/2009

Well I am disappointed as a potential user. I would rather have one service on which I can access all the programmes that I want rather than a proliferation of services all witheir idiosyncrasies and limited content.

James Ghani - 04/02/2009

Graham - It seems to me that the user functionality you require already exists ... it is called TV. The On Demand world represents the chance for program-makers and content creators to shine. By contrast to the 'Super Channel' status that you appear to favour, I would rather hope that the on-demand world represents 'true' user choice - the ability for viewers to select their genres and establish their own 'channels' according to personal content interest.

Justin Driskill - 04/02/2009

Competition is important so that people don't abuse their power as the most successful company in their field and produce lower quality, or bad value for money products. In this case however, being able to see all three channels offerings in one place would surely increase competition on a programme by programme basis and get rid of channel loyalty to an extent. This would surely mean that all three channels would make less pap which is only intended to grab ratings with an enticing programme name, as such weak offerings would not make commercial sense once the online revenue was factored in. As a potential user of this service I am dissapointed that I'll have to continue to wade through bad shows on good channels just because this service would be too good to be competed with by other services, which in any case will offer the same rubbish which I \(and probably most of kangaroos proposed target market) don't watch anyway.

Mark Palmer - 04/02/2009

Several inconsistencies of logic. 1. Why couldn't the competition work this out earler saving everyone a fortune. 2. How does this logic square with the Digital britain view which is encouraging Ch4 and BBC to work together to make a viable product and market. 3. There are other ways of regulating rstrictive competition or leveraging it. It isn't always a yes and no. If a big slug of cash was ringfenced back into programming it would be no bad thing for us as consumers.

Louise Derry - 17/02/2009

I find it disappointing that there arent more channel owners taking up the use of online platforms like http://www.viewtv.co.uk which is available as an online "sky" platform with the ability to stream 900 channels built for all television and content owners to setup and manage there own content with in built advertising systems and a great Silverlight distribution system for Live and On demand content. It is a great place for all content and channel owners to distribute there content from one location making it consumer friendly and channel owner friendly.