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Paramount, Europe Anti-Trust Watchdog Agree on Deal on Cross-Border Access

Deal latest symbolic challenge to territory-by-territory licensing in continent

MADRID — European anti-trust officials have accepted commitments by Paramount not to prevent consumers outside Britain from having access to its programming on U.K. pay-TV giant Sky, as long as Sky allows such access without advertising the Hollywood studio’s content to potential clients outside the U.K..

Paramount’s pledge is now legally binding as part of a five-year deal struck between it and the European Union’s anti-trust authority, according to an E.U. statement Tuesday.

The authority has also accepted Paramount’s promise not to insist that Sky prevent broadcasters outside Britain from making Paramount programming available via pay-TV in the U.K..

“Paramount has now committed that it will neither act upon nor enforce those clauses in existing film licensing contracts for pay-TV with any broadcaster in the European Economic Area,” the European Commission, the E.U.’s executive arm, said.

It added that Paramount would also refrain from re-introducing such clauses in film licensing contracts for pay-TV with any broadcaster in the EEA.

The agreement sealed Tuesday stemmed from the commission’s investigation into whether the six major Hollywood studios — Paramount, Sony, Warner Bros., 20th Century Fox, NBCUniversal and Disney — unlawfully restricted access to their content in Europe by cutting Britain-only licensing deals with Sky U.K. Sky U.K. is part of pan-European pay-TV giant Sky.

Paramount’s concessions do not apply to the other studios, which have criticized the concessions as too generous. Still, the practical effect of the agreement may be “fairly minimal,” said Guy Bisson at Ampere Analysis.

Paramount’s commitment turns on “access to Sky services from outside the U.K. on an unsolicited basis,” Bisson said, meaning that those potential customers would have to approach Sky on their own initiative to ask about signing up. “We’re talking about a potentially small group of people who want to access Sky in other member states, which is not so fundamentally different from what goes on today in the gray market in Europe for satellite services.”

But the deal will be regarded with dismay and pessimism by Hollywood and European executives as the latest and biggest symbolic challenge to territory-by-territory licensing of film and TV content in Europe, which has been their industries’ financial backbone in the region.

The agreement almost encourages pan-Europe deal-making, which in turn would favor bigger companies, Bisson said. “If we start going down that route, the major beneficiaries of this will be companies like Sky, not smaller players.”

Benoit Keane, a Brussels-based competition lawyer., said there was no indication that the other Hollywood studios under investigation would follow Paramount’s example rather than continue to fight their case all the way to the European Court of Justice.

Viacom and Paramount issued a statement Tuesday that “no admission of liability” had been made by Paramount in the deal, and that “today’s agreement eliminates the possibility of fines and enables the commission to close similar pending cases against Viacom and Paramount relating to broadcasters in Italy, France, Germany and Spain.”

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