Ofcom Discussion

I've found something on the Ofcom website that sheds some light on this issue. It also illustrates Ofcom's bizarre thinking.

In 2008 a shopping channel named Smart Shop TV fell foul of Ofcom, who intended to fine the licensee. Ofcom seemed to be aware that the licensee 'Ebak Ltd' was a dormant company ever since formation, but there was a holding (parent) company linked to it called 'Smart Shop TV Ltd'. Presumably they expected this company to pay the fine.

On further investigation Ofcom discovered that the parent company was insolvent and would therefore be unable to pay the fine. This represented to Ofcom a 'change in circumstance' which enabled them to reconsider the licence, which they then revoked.

What does this tell us?

Using Ebak Ltd as an example it appears that Ofcom are happy for non-trading companies to be licensees as long as they have a linked parent company (or presumably a subsidiary) that is trading and is financially solvent. However, I don't think Ofcom would be happy with a random third party paying the bills on behalf of the licensee as it would make a mockery of their strict rules (thou shalt not sub-contract the licence etc).

With regard to SEL, Ofcom probably saw that the company had a trading subsidiary 'Sport Television Ltd' so were happy that commercial obligations could be met. They are presumably unaware that this company is now nearly £800,000 in debt and is in the process of being wound up. This is an exact repeat of the Ebak/Smart Shop scenario.

This must surely compromise the status of SEL as they have no parent company, thus they cannot pay fines or deal with any other financial obligations on their own, including paying the Ofcom licence annual fee.

Given this scenario, including the threatened sanction by Ofcom, I would think it inconceivable that SEL could continue as a licensee. This possible revocation seriously compromises the position of the company that's currently transmitting on SEL-licensed channels.

It'll be interesting to see what happens next!

Here's a quote from the Ofcom report on Smart Shop TV.

Condition 29(3)(b) of the Licence states that Ofcom may revoke the Licence if there is a change in the nature, characteristics or control of the Licensee such that, if it fell to Ofcom to determine whether to award the Licence to the Licensee in the new circumstances, Ofcom would not award the Licence to the Licensee.

Ebak Ltd, the holder of the Smart Shop TV Licence has remained a dormant company since its incorporation in March 2005 and never traded. The holding company of the Licensee, Smart Shop TV Ltd, entered into voluntary liquidation on 17 March 2008 . As Ebak Ltd never traded, Smart Shop TV Ltd, until it went into voluntary liquidation, funded the television broadcasting operations of the Licensee.
Given the Licensee was a dormant company and the Licensee’s holding company is now insolvent this effected a change in the nature, characteristics or control of the Licensee in such a way that Ofcom would not now award the Licence.
Ebak Ltd was notified on 20 March 2008 that Ofcom was minded to revoke the Licence. The Licensee failed to make any representations. Therefore Ofcom considered that it was appropriate to proceed with the revocation of the Licence with effect from 4 April 2008.

http://stakeholders.ofcom.org.uk/enforce...ns/obb107/