U.K. media regulator Ofcom has asked the Competition Commission to investigate the prices that Rupert Murdoch’s BSkyB charges its subscribers and third-party suppliers for firstrun Hollywood movies.
Ofcom is “concerned that the way in which these movies are sold and distributed creates a situation in which BSkyB has the incentive and ability to distort competition. The end result for consumers is less choice, less innovation and higher prices.”
Ofcom is referring two aspects of the U.K. pay TV movie market to the Competition Commission.
The first concerns the rights to movies sold by Hollywood to broadcast films for the first time on pay TV; the second examines the wholesale supply of pay TV packages containing movie channels based on those rights.
The regulator also fears that BSkyB may use its market power to dominate the emerging video-on-demand market for premium films.
The Competition Commission will have up to two years to complete and rule on the probe.
A BSkyB spokesman said: “Ofcom is yet again seeking to intervene in a sector in which consumers are being well served.
“There have never been so many ways to access movies, with innovation stretching across a wide variety of channels and platforms, including multiple ways to access Sky Movies.”
A spokeswoman for BSkyB rival Virgin Media said: “We have long argued that current arrangements for the supply and acquisition of premium movies do not serve consumers well.”
In March, Ofcom ordered BSkyB to cut the prices it charges rival platforms, including Virgin Media, for Sky Sports 1 and 2 by more than a fifth. BSkyB is contesting the ruling.