The Competition Directorate General of the European Commission is eagerly awaiting the Cyprus Competition Commission’s final verdict regarding CYTA’s deal with LTV, which may be delayed due to the complex issues involved in the case.
Brussels got involved with the case after alternative telecom providers PrimeTel and OTEnet Cyprus jointly filed a complaint with the EC, charging CYTA of abusing its dominant market position and trying to strangle competition in the lucrative DSL market following its content deal with subscriber channel LTV.
The whole case is built on the fact that both CYTA and LTV share the broadcast rights of Cyprus football, with the alternative telecom companies charging that either they should also be allowed to buy the football content from LTV, or the broadcast rights should be auctioned off again.
Well informed sources told the Financial Mirror that the Chairman of the Competition Commission, George Christofides, will probably have to make the most difficult decision of his career considering that on the one hand, the government of President Tassos Papadopoulos is backing the deal, while on the other hand, there are overwhelming arguments that there is abuse of dominant market position.
Although the CYTA/LTV content deal has received the backing of the cabinet and CYTA’s 2006 budget was approved by parliament, both sides have said the agreement will not be implemented until the Competition Commission gives the nod.
But can the Competition Commission give its consent considering that LTV and miVision, the CYTA subsidiary channel, have secured the broadcast rights for Cyprus football? This the main attraction to lure the majority of LTV’s current 62.000 subscribers to shift to miVision from Multichoice, itself involved in a bitter fight with LTV over the way the whole deal was negotiated.
Sources close to PrimeTel said they must be allowed either to pay and receive the football rights at the same price paid by LTV and now acquired by CYTA, or be allowed to bid for the rights in a new auction to be held by the Cyprus Football Association (KOP), which has sold the exclusive broadcast rights to LTV to the year 2010.
The Competition Commission also faces another dilemma considering that after intense pressure from Brussels it previously ordered KOP to break the transmission rights into two, to LTV and miVision.
“Last time they understood and made an attempt to stop LTV from abusing its dominant position and forced KOP to give some broadcast rights to miVision. Now there is no question that the two are controlling 100% of the market.”
Multichoice and alternative mobile phone provider areeba have also filed complaints against the deal.
They point to a clause in the deal according to which CYTA subsidiary Digimed would acquire a 25% stake in the share capital of LTV in addition to reports that CYTA will purchase LTV bonds valued at CYP 10 mln.
In the initial stages, CYTA has also agreed to pay LTV an annual fee for its content amounting to some CYP 5.5 mln spread over three years after which the two sides hope to cover their costs by sharing the revenue.
This is seen as an indirect way of state aid since a state-owned company is seen subsidising a private company, something which is likely to be blocked by Brussels.
CYTA Chairman Stavros Kremmos has dismissed the complaints arguing that miVision is open to cooperation deals with everybody. He said miVision currently has 8000 subscribers and needs content to increase its numbers.
Sources at areeba suggest that the mobile phone operator, with a present market share of 11%, would be ready to launch its Mobile TV platform some time this summer, but that this would be futile if content such as sports and football is unavailable.
