A proposed video-on-demand service jointly run by the BBC, ITV and Channel 4, known as 'Kangaroo' has been blocked by the Competition Commission. It was decided that the service would pose too much of a threat to similar ventures.
Chairman of the Competition Commission, Peter Freeman, said: "After detailed and careful consideration, we have decided that this joint venture would be too much of a threat to competition in this developing market and has to be stopped.
"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 VOD services to UK viewers. We thought the joint venture parties would have an interest in doing so, in order to make Project Kangaroo a success."
Freeman believes that viewers will benefit much more from VOD services if the channels in the Kangaroo venture competed with each other, rather than combine into one service.
"Without this venture, BBC Worldwide, ITV and Channel 4 would be close competitors of each other. We thought that viewers would benefit from better VOD services if the parties—possibly in conjunction with other new and/or already established providers of VOD—competed with each other.
"We looked closely at the possible benefits to viewers which this joint venture might bring. We found that these and other benefits could come just as well from other projects that were less damaging to competition. We expect these alternatives to be much more likely to develop in the light of our decision."
BBC Worldwide, ITV PLC and Channel 4 have responded to the Competition Commission decision, stating: ""We are disappointed by the decision to prohibit this joint venture. While this is an unwelcome finding for the shareholders, the real losers from this decision are British consumers. This is a disproportionate remedy and a missed opportunity in the further development of British broadcasting."
Chairman and Chief Executive of ITV, Michael Grade is "surprised" at the decision, because ITV and the other broadcasters "...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.
"However, 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."
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