Sky, Virgin voice Kangaroo VOD concerns

Sky, Virgin Media and web TV service Joost have submitted concerns about Project Kangaroo to the Office of Fair Trading.

The firms say the in-development video-on-demand service could dominate the market and stifle competition.

The BBC, ITV and Channel 4 are collaborating on an application which would be commercial and funded by adverts and download fees. The OFT is reviewing the plans and has invited comments from other companies.

Graham McWilliam, Sky's group director of corporate affairs, said: "The shareholders of Kangaroo must not be allowed to leverage their unique position in television, built on public subsidy, into the on-demand space.

"We would be particularly concerned if their content was not made available on similar terms to competing services, or if Kangaroo were to benefit from free cross-promotion on public service channels."

A spokesman for Virgin Media, which offers the BBC's free iPlayer VOD service to its cable TV customers, added: "We've made clear to the OFT that we think the proposed merger raises some significant questions."

Mike Volpi, chief executive of British-based web television service Joost, revealed that the company had unsuccessfully sought to carry content from the three Kangaroo partners.

"We have asked many times," he said. "In the case of the commercial players, negotiations have broken down over price. In the case of the BBC it's just been a flat-out no.

"When you have a situation where so much good content ends up being potentially exclusive through a single distribution channel, it makes it very difficult for any player outside of those three to be competitive in the UK market."