Virgin appeals Ofcom's Sky pricing model

Virgin Media has launched a legal challenge against Ofcom's wholesale must offer (WMO) model for not including all of Sky's premium content channels.

According to a legal filing at the Competitions Appeal Tribunal, the cable operator believes that Ofcom has "failed to consider relevant matters" by excluding Sky Sports 3, Sky Sports 4 and the Sky Movies channels from its pricing model.

The company is concerned that the WMO system fails to set a pricing structure for bundles of Sky Sports 1 and/or 2 with Sky's other sport channels or the Sky Movies channels. The loophole could potentially allow Sky to get around Ofcom's pricing system by bundling Sky Sports 1 and 2 with other channels.

Virgin Media has further challenged the calculation methodology used by Ofcom for setting its new wholesale pricing ratecard.

In March, Ofcom ordered Sky to offer Sky Sports 1 and 2 to rival operators for £10.63 per subscriber per month for each channel on a standalone basis, representing a reduction of 23.4%.

A bundle of both channels, which most service providers prefer to offer, was trimmed by 10.5% from £19.15 to £17.14.

Sky reached an interim agreement in April with BT Vision, Top Up TV and Virgin Media for the WMO model to come into force.

However, the company stipulated that all three operators must place the price difference in an escrow account which Sky can collect if it wins its legal appeal against Ofcom's model.

Meanwhile, Virgin Media will soon start offering Sky's basic high definition channels, including Sky Sports 1 HD and Sky Sports 2 HD, as part of a deal to sell its Virgin Media TV business to the satellite broadcaster.