Kangaroo setback "frustrates" broadcasters

The BBC, ITV and Channel 4 have admitted they are "frustrated" at the decision by the Office Of Fair Trading to refer Project Kangaroo to the Competition Commission.

However, the broadcasters have painted the move as only a "delay" to the proposed video on demand service and insisted they are confident it will still go ahead.

"The parties are confident that when properly subject to more detailed scrutiny by the Competition Commission, the Competition Commission will conclude that the joint venture will provide wider choice for consumers and be seen as a pro-competitive force in the market place," the three companies said in a joint statement.

They acknowledged the proposal "involves some very complicated issues" but said their "aspiration is that Kangaroo will... provide an example of UK innovation and collaboration for the benefit of consumers and advertisers alike".

Individually, senior executives at the companies have been more critical of the OFT's decision, particularly ITV's Michael Grade, whose company will lose an estimated £4m because of the delay.

"While I understand that the Office of Fair Trading is carrying out its statutory obligations, there is a serious problem with a regulatory framework that seems unable to take the most important interest into account - that of British viewers," said the broadcaster's executive director. "As digital distribution gathers pace, we want to make our content available for free to online users in the most accessible way through Kangaroo.

"There must be a level playing field for those of us whose investment sustains UK production. Companies without that commitment, who financially contribute virtually nothing to the UK creative economy, are trying to use a narrow regulatory remit to exploit our investment at little cost or risk to themselves... In the meantime, as joint shareholders in a ground-breaking venture we feel passionately about, we will engage in the continuing process with the Competition Commission."

John Smith, chief executive of BBC Worldwide, said the consequent delay in launching Kangaroo would be felt by "consumers who are hungry for Kangaroo’s video-on-demand service".

Jon Gisby, Channel 4's director of new media and technology, said: "We passionately believe that working with our partners on Project Kangaroo represents the best next step in ensuring consumers can access high quality UK content. We are therefore disappointed with the decision, but will engage fully with the Competition Commission to review the issues in more detail."

Some Digital Spy forum members were annoyed to hear about the delay. Ayce, from Morecambe, Lancs, said: "(There is) always one company playing the competition card... how about they offer a rival (or individual services) via Freesat / (the) web instead of moaning about it?"

Forum member Chris Lewis noted the potential knock-on effect to the BBC's plans to deliver VOD to television sets via Ethernet connections. "Does this mean bad news for Freesat boxes or did we not expect these services this quickly anyway?" he asked.