Sky to challenge watchdog's ruling it must sell sports channels to TV rivals

Consumer groups said the broadcasting regulator's decision would mean more choice and lower prices, but football and cricket bodies reacted furiously to the potential loss of income and threatened legal action of their own.

Ofcom's announcement that Sky must offer its Sky Sports 1 and 2 channels to other broadcasters at a wholesale price set by the regulator follows a three-year investigation into the industry after concerns were raised by BT, Virgin Media, TopUp TV and Setanta, which has since gone bust.

The regulator said Sky was exploiting its market power by restricting the distribution of premium channels to rivals. This prevented fair and effective competition, reduced choice and held back innovation and investment.

It added: "Today's decisions are therefore designed to ensure fair and effective competition which should lead to greater investment, innovation and choice for consumers."

BSkyB immediately said it would challenge Ofcom's conclusions before the Competition Appeal Tribunal, describing the ruling as an "unprecedented and unwarranted intervention".

A spokesman said: "After three years of engagement with Ofcom, we now look forward to a judicial process which will apply impartial analysis and clear legal standards."

Ofcom has set a wholesale price of 10.63 per subscriber per month for each of Sky Sports 1 and 2 when sold on a stand-alone basis, 23.4 per cent below the current wholesale price to cable operators.

Football's Premier League and cricket and rugby's governing bodies argued the move would "irreparably damage" investment in sport.