Overseas VoD Rivals Demand Halt to UK's Kangaroo Launch

12 January 2009

LONDON: Project Kangaroo (the proposed video-on-demand internet service from British broadcasters BBC Worldwide, ITV and Channel 4) has come under fire from three overseas-headquartered businesses that control rival operations in the UK.

Leading a concerted howl to the UK Competition Commission is Virgin Media, registered in the corporate haven of Delaware USA, accompanied by Babelgum and Joost, respectively registered in European tax asylums Ireland and Luxembourg.

In a preliminary decision handed down last month, 
the commission ruled that although Kagaroo would substantially restrict competition in the supply of video on demand services in the UK, it would have negligible effect on the online advertising market.

In best bureaucratic tradition, the ambiguous ruling left Kangaroo's launch in no-man's-land, a situation equally disadvantageous to all parties.

Meantime, a battle of words is in full swing.

Protests Virgin: "The commission has no realistic alternative but to prohibit the proposed transaction." Kangaroo, it submitted, would concentrate "so much attractive content" into one entity, that it would be able to "dictate the form and structure" of the VoD market.

There are no alternative remedies [to banning Kangaroo] the US firm concluded.

Joost sang from the same hymn-sheet, advocating prohibition on the basis that Kangaroo's three backers could effectively compete in the VoD market without the need to combine.

Babelgum also crooned the same anticompetitive lyrics, urging prohibition. It conceded, however, that limiting Kangaroo's ability to wholesale its content to third parties would partially address its concerns.

The Commission's final decision is due on or before February 8. In the interim it is holding further discussions with the main combatants.

Data sourced from BrandRepublic (UK); additional content by WARC staff