European Union Probes Hollywood Studios’ Pay TV Deals

Probe looks at deals that stop pay TV companies airing movies in more than one country

European Union Probes Hollywood Studios' Pay

The European Union’s anti-trust authority has launched an investigation into pay TV deals done by Hollywood majors in Europe to determine whether their practice of licensing content on an exclusive country-by-country basis may be considered harmful to competition.

The probe — which is being carried out by the EU’s executive arm, the European Commission — will examine the clauses of licensing arrangements between U.S. studios and major European payboxes and platforms for broadcasting via satellite and also online streaming.

The studios being investigated are 21st Century FoxWarner BrothersSony PicturesParamount Pictures and NBCUniversal.

The anti-trust probe will focus on their deals with European pay TV companies including the U.K.’s BSkyB, France’s Canal Plus, Italy’s Sky Italia, Germany’s Sky Deutschland and Spain’s DTS.

Typically, these deals partition the market according to national borders, granting broadcasters “absolute territorial protection.” But according to the authorities this also poses a potential infringement of anti-trust rules, because it bars “access to potential subscribers” who might not be located in the individual European state where their subscription service stems from, according to an EU statement.

“Such provisions might constitute an infringement of EU antitrust rules,” said Commissioner Joaquin Almunia, the EU’s antitrust chief.

“More and more European citizens watch films, use pay TV services broadcast by satellite and increasingly available through online streaming,” he told reporters in Brussels, the Associated Press reported.

 “If you subscribe to a pay TV service in Germany and you go to Italy for holidays, you may not be able to view the films offered by the service” on digital devices, Almunia was quoted by Bloomberg as saying.

“If you live in Belgium and you want to subscribe to a Spanish-speaking service, you may not be able to subscribe at all if there is absolute territorial exclusivity.”

The move follows a ruling by the EU Court of Justice in October 2011 that addressed territorial deals for the rights to air soccer matches from the English Premier League. The court ruled that granting absolute territorial exclusivity to a company was anti-competitive and could not be justified.

However Almunia specified that the probe doesn’t question all forms of territorial exclusivities and does not aim at merely introducing pan-European contracts instead of national ones.

The Commission has no legal deadline to complete its complex antitrust inquiries which cut to the heart of  key underlying issues in the EU’s evolving regulatory framework, all related to whether its 28 member states can ever really become a single market, despite having a common currency.