Competition Commission challenges Hollywood pacts

Satcaster BSkyB’s control over pay TV movie rights in Blighty is restricting competition, leading to higher prices and reduced choice and innovation, the U.K. Competition Commission has provisionally ruled.

The regulator said BSkyB’s contracts with the six Hollywood studios are a barrier to entry to potential rivals, including telco BT and cabler Virgin Media.

The commission said the satcaster, which has 10 million subscribers, should be barred from signing exclusive deals with Hollywood for movie rights in the first subscription pay-TV window. It added that these deals should be modified so competitors can buy other rights, including video on demand.

Competition Commission chairman Laura Carstensen said, “Sky has had control of recent movie content on pay TV for many years.

“At the heart of the problem is Sky’s strong position in the pay TV market, with twice as many subscribers to pay TV as all other traditional pay TV retailers put together.”

This gave BSkyB the advantage in movie rights acquisitions, which rivals could not overcome, she said, adding, “If things stay as they are, we see no likely prospect of change.”

Sky Movies director Ian Lewis said, “It makes no sense to think Sky Movies is somehow protected from the forces of competition. Sky has multiple competitors who offer a wide range of movies either before or at the same time as us. Consumers have never benefited from so much choice and innovation.

“We stand by our track record in creating choice and innovation, whether offering movies in HD and 3D, or on-demand to your TV, PC or laptop.

“Ultimately, we know that consumers can choose whether to subscribe, and studios can freely choose whether to deal with us or someone else, so we have to remain focused on delivering choice, value and innovation.”

Virgin Media’s CEO Neil Berkett said he hoped the findings would transform the market and allow new services to flourish.

A final decision is due in a year’s time.

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