The U.K. Office of Fair Trading won’t investigate Project Canvas, the joint venture to bring Internet content and new video-on-demand services to television. The OFT has decided that it doesn’t have jurisdiction to review Project Canvas under the merger provisions of the Enterprise Act 2002 as none of the partners, including the British Broadcasting Corp., contributes an existing business to the venture.
The BBC started the project, contributing only existing research and development rather than a separate business unit. The contributions of the other joint venture partners will be primarily financial. Project Canvas is a joint venture between the BBC, ITV PLC, BT Group PLC, RTL Group SA’s Five, Channel 4, TalkTalk Telecom Group PLC and Arqiva Ltd. The partners plan to launch the project around Christmas.
Under the Enterprise Act 2002, a relevant merger situation is created if two or more enterprises cease to be distinct and if the value of U.K. revenue of the business being taken over exceeds £70 million. It also applies if a 25% share of supply in the U.K. is created as a result of a transaction. The project, which will allow U.K. viewers to watch free-to-air broadcasts and Internet content on television, will help traditional broadcasters attract new audiences while retaining existing viewers who have turned to the Internet for entertainment.
Project Canvas partners welcomed the OFT decision, noting the joint venture wouldn’t own, control or aggregate any content. “Project Canvas aims to create an open platform that delivers a connected future for free-to-air TV and a competitive market for internet-connected TV services in the U.K. The Project Canvas partners are committed to achieving that aim,” Project Canvas director Richard Halton said in a statement.
In December last year, the BBC’s controlling trust provisionally approved the corporation’s involvement in Project Canvas, saying that “the likely public value of the proposal justifies any potential negative market impact.” Watching TV programs online has increased in popularity, aided by the BBC’s on-demand Internet-TV service, iPlayer. Commercial broadcasters are exploring ways to distribute their programs to boost advertising. Project Canvas has faced criticism from pay-TV companies, particularly British Sky Broadcasting PLC, which cites a lack of independent scrutiny for the project. News Corp., the owner of Wall Street Journal publisher Dow Jones & Co., holds about a 39% stake in BSkyB.