The European Commission, the executive branch of the EU, said Friday it was inviting comments from interested parties “on commitments offered by Paramount Pictures to address competition concerns relating to contractual clauses preventing the cross-border provision of pay TV services.”
In July, the EC launched an investigation into allegations that pay TV operator Sky and six Hollywood studios — Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros. — “have bilaterally agreed to put in place contractual restrictions that prevent Sky U.K. from allowing EU consumers located elsewhere to access, via satellite or online, pay TV services available in the U.K. and Ireland.”
The EU commissioner in charge of competition policy, Margrethe Vestager, said at the time: “European consumers want to watch the pay TV channels of their choice regardless of where they live or travel in the EU. Our investigation shows that they cannot do this today, also because licensing agreements between the major film studios and Sky U.K. do not allow consumers in other EU countries to access Sky’s U.K. and Irish pay TV services, via satellite or online. We believe that this may be in breach of EU competition rules. The studios and Sky U.K. now have the chance to respond to our concerns.”
The move was seen by some as an attack on so-called “geo-blocking” and “territorial exclusivity,” and the way that the movie and TV business sells rights territory by territory. In effect the EC action threatened to unravel the film and TV business as we know it by enforcing a system of pan-European licensing by the back door, which is in line with the EU’s Digital Single Market policy.
To address the Commission’s competition concerns, Paramount Pictures has offered the following commitments, which would apply throughout the European Economic Area (the 28 EU countries plus Iceland, Liechtenstein and Norway):
First, when licensing its film output for pay TV to a broadcaster in the EEA, Paramount Pictures would not introduce contractual obligations (referred to as a “Broadcaster Obligation”) that prevent or limit a pay TV broadcaster from responding to unsolicited requests from consumers within the EEA but outside of the pay TV broadcaster’s licensed territory;
Second, when licensing its film output for pay TV to a broadcaster in the EEA, Paramount Pictures would not introduce contractual obligations (referred to as “Paramount’s Obligation”), which require Paramount to prohibit or limit pay TV broadcasters located outside the licensed territory from responding to unsolicited requests from consumers within the licensed territory;
Third, Paramount Pictures would not seek to bring an action before a court or tribunal for the violation of a “Broadcaster Obligation” in an existing agreement licensing its film output for pay TV;
Finally, Paramount Pictures would not act upon or enforce a “Paramount Obligation” in an existing agreement licensing its film output for pay TV.
The commitments would apply for five years and cover both standard pay TV services and, where they are included in the license with a broadcaster, also subscription video-on-demand services. The commitments would cover both online services and satellite broadcast services.
The EC says interested parties have one month to submit their comments. The full text of the Paramount Pictures’ commitments are available here.
In a statement, Paramount Pictures and its parent company Viacom, said:
“Viacom and Paramount Pictures are gratified to have reached an early and satisfactory resolution with the European Commission regarding the European Commission’s statement of objections adopted in July 2015. Subject to final approval, Viacom and Paramount will give binding commitments to neither enforce nor renew the types of clauses in premium pay TV license agreements that were described in the statement of objections and that restrict European Economic Area broadcasters from responding to unsolicited requests by consumers located in a different territory in the EEA. No admission of liability will be made.
“The commitments permit Paramount to continue to license films through premium pay TV output license agreements in Europe on an exclusive territorial basis. In addition, 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.”
A Sky spokesperson commented: “We are engaging with the European Commission in its ongoing inquiry to examine cross-border access to film content. We will respond to the Commission’s consultation on the Paramount proposal, as appropriate.”