BSkyB has been told to make its Premier League football and movie packages available to more viewers.
The satellite TV giant has almost nine million subscribers and has become Britain's largest pay-TV service largely through buying the rights to show the most popular sport and blockbuster movies.
However, broadcasting watchdog Ofcom has told the company that if it wants to avoid a lengthy and expensive battle with the Competition Commission, it must make its content available to a wider audience. Initial research by the media regulator found BSkyB did have market power in the wholesale supply of such content, which acted as an incentive to limit the distribution to others.
The move will force the broadcaster to offer its premium packages to rivals BT, Setanta, Top Up TV and Virgin Media. The services had all complained in early 2007 that BSkyB was limiting the sharing of channels such as Sky Movies and Sky Sports and had set prices too high.
They had accused the group of using its control to suppress competition, prompting the media regulator to launch an inquiry to explore whether new business models such as TV over the Internet would be able to enter the market.
Ofcom has agreed, describing BSkyB's distribution as "limited" and asserting that content is the major influence on consumers choosing their pay TV subscriber.
It claims that by far the most important content is live sporting events and premiere screenings of blockbuster films, But it has been unable to reach a conclusion on the pricing issue.
The independent regulator said that it could employ "section 316 of the Communications Act" to oblige BSkyB to meet its requirements.
BSkyB already has certain wholesale agreements with cable operator Virgin Media, and the proposal would see Sky expand that offering to new platforms.
In its report Ofcom states: "No company other than BSkyB has ever won any of the relevant rights from the major Hollywood studios, giving BSkyB 100% market share."
In a statement it added: "This proposal should enable consumers to access this content regardless of their choice of pay-TV platform, and provide consumers with an increased choice of service bundles."
BSkyB said it already makes its content available on rival platform Virgin Media and is developing its own service, Picnic, which will make its premium content available on digital terrestrial TV (DTT) through an aerial.
Yesterday, Ofcom gave its consent to Picnic on DTT, but on the condition that BSkyB makes its premium sport and movie channels available on a wholesale basis.
The move comes just days after Alex Salmond said he would push for Scotland's international football matches, which are currently shown on Sky, to be aired free on television.
Any move to include the games on a free list would hit the SFA, as it would be unable to negotiate exclusive deals with paid-for broadcasters.
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