But the intervention has not gone down well with Sky, which says: “We disagree fundamentally with Ofcom’s approach, analysis and conclusions. In light of Ofcom’s determination to pursue its preferred outcome, we will use all available legal avenues to challenge this unwarranted intervention.” That’s all Sky is saying on the record—but it’s clear the company is angry Ofcom has intervened to clip its wings in the pay TV market—and that the regulator feels it is better placed to decide its wholesale distribution rate.

As I wrote recently, Sky’s success—combined with straight-jacketed UK sports rights—does mean that pay TV companies can’t innovate in the same way they might in other countries: ESPN (NYSE: DIS) is working on creating a new TV channel, but we don’t expect to recreate its ESPN360 experience here, which offers on-demand, PPV, live sports in the UK. Former investors in Setanta may also now wonder how or why it didn’t evolve beyond a one-dimensional linear TV model—but the pay TV is game in the UK is simple: grow your linear TV subscription base as quickly as possible to be as big as possible. Sky itself doesn’t have a full IPTV or genuine VOD offering, though plans are well underway.

Sky argues it doesn’t influence the way TV rights are packaged says it wins its rights auctions fair and square. But it has the distribution platform its rivals lack as it charges towards 10 million UK subscribers and Ofcom simply thinks the best shortcut to better, more innovative and cheaper pay TV is give Virgin Media (NSDQ: VMED), Top Up TV and BT (NYSE: BT) a helping hand in weakening it.

Update: Sky CEO Jeremy Darroch this afternoon further clarified just how upset his company is, saying Ofcom’s plan “defies belief”. He wants wide distribution of Sky channels, but says “forcing Sky to sell its channels for less than their true value is a subsidy for companies that have shown no appetite for investment in programmes”. He’s adamant that BT and Virgin Media shouldn’t be “handed a reward at Sky’s expense for their repeated failure to invest”.