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Inside Move: Program glitch

EU probe threatens studios' pay TV deals

As if they didn’t have enough problems selling movies and series into the Euro market, the Hollywood studios may soon face another hitch.

European Competition Commissioner Mario Monti is apparently set to charge the studios with breaching EU antitrust laws regarding sales to pay TV platforms.

The EU will claim standard industry contracts that include “most-favored nation” clauses illegally limit competition and raise prices for cable and satellite subscribers.

The main players under scrutiny are the seven MPA companies plus DreamWorks.

Ironically, prices for Hollywood movies have dropped sharply in several European countries over the last three years because pay TV platforms have imploded or merged.

“The real question isn’t our being in cahoots on the selling side, but that there is very little competition on the buying side because there’s often only one player in each territory,” says one L.A.-based TV exec.

The studios have refused to comment officially on the antitrust issue, but they have said from time to time that the so-called most-favored nation clause was rarely if ever “held to account” in negotiations.

Still, independent observers say most of the majors’ long-term deals included the same inevitable B-tier material packaged alongside top titles — and that the formula for determining the value of a particular movie abroad was remarkably similar from contract to contract.

Once the studios receive the EU’s statement of objections, they’ll have two months to respond and can demand a hearing. If they are unable to persuade the commission to change its opinion on the contracts, they’ll have to amend them or risk sanctions.

Companies found guilty of EU antitrust violations face fines as high as 10% of sales .

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