BSkyB Challenged Over Pay-TV Movie Model

LONDON: The Competition Commission has taken issue with BSkyB’s control of pay-TV movie rights in the U.K., with provisional findings that say the current model is restricting competition, leading to higher prices and reduced choice.

Currently, Sky has exclusive movie deals with each of the six major Hollywood studios. Regulator Ofcom first referred the case to the Competition Commission in August 2010 over growing concerns from rivals Virgin Media and BT Vision, among others.

In its provisional findings, the Competition Commission said that rival services are unable to bid successfully against Sky for the rights to air movies from the studios in the first subscription pay-TV window because of Sky’s large subscribers base. As a result of a lack of effective competition, the competition watchdog found that subscribers to Sky Movies were paying more than they otherwise would, and there was less choice and innovation than expected in a market with more effective competition.

The Competition Commission is suggesting either to restrict the number of studios that Sky can buy movies from; restrict the range of rights Sky can acquire; and require Sky to offer subscribers any movie channel containing first-run TV-movie content created by a rival.

"Sky has had control of recent movie content on pay-TV for many years," commented Laura Carstensen, the chairman of the movies on pay-TV market investigation. "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 provides Sky with a great advantage when it comes to bidding for movie rights, which no rival bidder has yet been able to overcome—and, if things stay as they are, we see no likely prospect of change.”

BSkyB said in a statement that it "continues to believe that no regulatory intervention is required and that consumers benefit from high levels of choice, value and innovation across a wide range of providers.

"We note that the CC’s findings remain provisional and have been issued for consultation. We will continue to engage with the CC during the on-going regulatory process."

A final decision is to be made next year.