Internet: Watchdog continues to sniff around Kangaroo

Internet: Watchdog continues to sniff around Kangaroo

ITV suffered a further blow yesterday when the Competition Commission yesterday extended the deadline for its investigation into its broadband video joint venture, Project Kangaroo.

The UK's largest commercial broadcaster's venture with Channel 4 and BBC Worldwide will allow internet users to watch more than 10,000 hours of classic TV from the broadcasters' archives.

Some programmes will be free, provided viewers are willing to put up with adverts, while others will be available to buy and download. The venture will also sell its archive to other video-on-demand services, such as BT Vision.

It was originally due to launch this year but the Competition Commission inquiry, which is concerned that the venture could come to have a stranglehold on TV content, has pushed that back to 2009.

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This week ITV's boss, Michael Grade, said delays to the project were part of the reason the company's online arm would miss its revenue target of £150m. Instead of hitting that target by the end of the decade, ITV will have to wait until 2012.

When the inquiry was announced in late June, Grade lashed out at what he saw as an unnecessary delay "at the very 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 commission was meant to complete its investigation and publish its report by December 14, but that deadline has been extended until "mid-January". It said yesterday that the partners missed a deadline for providing details on the scope of the proposed online TV service.

On July 31 the commission requested more information from the joint venture partners on the proposed scope and activities of Kangaroo. It gave the broadcasters six days to provide the information. "The Competition Commission's questions have revealed a number of important issues which are outstanding between the parties and which they have indicated they are unable to resolve without further negotiation," the regulator said.

The regulator is seeking to establish whether the launch of Project Kangaroo will result in a "merger situation" leading to competition issues in the online video market. It will look at the effect of competition on pricing, range of content offered by different video-on-demand suppliers, quality and innovation.

The commission will look at four distinct markets: retail supply of video-on-demand (VOD) services, wholesale supply of VOD service, acquisition of VOD content rights, and advertising.

Issues the regulator wants to address include whether the market for advertising - either surrounding or embedded in VOD content - should be regarded as the market for online video advertising, an overall internet display-ad market, or whether it should be defined more widely to include TV advertising.

In terms of VOD content rights, the commission will look at the issue of whether when dealing with producers the market should be defined more widely to include traditional TV rights.

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