Telefónica facing sanctions for having overcharged rivals for soccer channel
The CNMC, the Spanish competition regulator, has today proposed opening disciplinary proceedings against telecoms giant Telefónica for previously overcharging other operators for access to its Movistar Partidazo television channel featuring top LaLiga soccer matches.
The offence relates to the 2016-17 season when operators were charged at a higher rate than should have been the case in the wholesaling of the pay-TV channel featuring top live games generally involving popular clubs Real Madrid and Barcelona.
The watchdog noted that although Telefónica acknowledged this error and paid out compensation in September 2018, “the operators had to bear higher costs than those that corresponded to them,” and, in light of the delay, there was “no possibility of repairing the possible effects on competition at the time,” as the operators had not been able to offer suitably attractive packages to potential customers.
In particular, Telefónica is accused of underestimating the number of pay-TV subscribers of rival operators in setting wholesaling prices, resulting in “higher costs for the operators that contracted this channel.”
The CNMC came to its findings after scrutinising whether Telefónica was complying with the commitments it made as a condition of its acquisition of pay-TV operator Digital Plus from media group Prisa in April 2015.
In order to protect competition in the market, the regulator ruled that Telefónica had to share 50 per cent of its premium content, including sports and movie channels, with rivals such as Vodafone España and Orange.
It was stipulated that the wholesale offer of these channels, including Partidazo, should be under conditions that were “fair, reasonable, objective, transparent and non-discriminatory.”
The pricing of the channels was determined by a 'guaranteed minimum cost' based 75 per cent on the recurring pay-TV subscribers of an operator, 20 per cent on share of fixed broadband access that could support TV services and 5 per cent on the quota of potential new subscribers to the TV service.
However, the competition regulator has deemed that the conditions were not met.
Its statement today concluded: “In view of such conclusions, the CNMC urges the initiation of a sanctioning proceeding upon finding indications of non-compliance with the commitments.”
Telefónica has yet to comment on the ruling.
The telecoms firm, which operates pay-TV service Movistar Plus, remains a prominent broadcaster of Spanish soccer, and indeed has strengthened its position for the 2019-20 season having acquired rights to the first-choice live match from LaLiga each week, and eight other live games from each round, in a three-year deal worth €2.94 billion ($3.3 billion).
Last year, Vodafone opted not to renew its main deals with rights-holders to carry premium soccer, citing the costs involved, and Orange has still to commit for the 2019-20 season onwards.