THE COMPETITION Commission (CC) yesterday decided not to allow the mammoth and lucrative deal between the Cyprus Telecommunications Authority (CyTA) and Cypriot pay-television channel LTV to take place.
The commission ruled that the deal ran counter to competition safety legislation.
LTV was reported to have reached a deal with the board of CyTA to manage the miVision platform from 2006. The deal was reported to be at a minimum fee of £2.5 million per year.
The co-operation agreement provided that subscriber channels LTV and ALFA remain on Multichoice’s platform until 2010, while at the same time LTV and Alfa will supply miVision, CyTA’s digital television platform, with entertainment content – such as movies, football, and games.
The deal was set to boost semi-governmental organisation CyTA’s profits by over £300 million from its 15-year collaboration with LTV.
But this arrangement came under scrutiny from the competition watchdog after private telecom providers and free-to-air television networks complained of the creation of a super cartel in the market.
One private operator, OTENet Cyprus, had already reported the deal to the European Commission.
CC Chairman George Christofides yesterday told reporters at a news conference that the deal was misusing and exploiting the competition market on the island.
Both LTV and CyTA were informed yesterday morning on the commission’s decision and have until July 24 to appear before the commission for mitigation.
Explaining the reasons behind the commissions decision, Christofides told reporters, “The clause of exclusiveness in the deal was one issue whilst the second
issue was the supremacy that the two sides had on the specific market in question. LTV’s supremacy for pay-TV market and the supremacy maintained by CYTA would ultimately create a barrier for other potential competitors in the market.”
LTV dominates the pay-TV market in Cyprus with some 60,000 subscribers.
The lengthily duration of the deal was another factor said Christofides who went on to add that the role of the commission was not to stop business ventures between organisations and companies but to safeguard the market.
The core argument over LTV’s deal with CyTA revolves around the soon-expected switch over to digital television around the island in 2012.
That would ultimately mean that any company wishing to offer pay-TV will need to either go digital – meaning they’re dependent on CyTA’s infrastructure and grip on the market – or they’ll have to settle for the more conventional satellite transmission, which supports a loosely limited number of channels by comparison.
In the wake of the extensive media coverage, LTV and CyTA decided to put the deal on ice.
