The Competition Commission has provisionally ruled that the control held by Sky over pay-TV movie rights is ‘restricting’ competition in the UK by other pay TV providers, meaning that prices are high and there is a ‘reduced choice’ for subscribers.
Satellite broadcaster Sky has held exclusive rights to broadcast movies by all six major Hollywood movies for many years, offering a first TV viewings through a pay-to-view format.
The provisional findings by the Commission state that, due principally to the advantage that Sky has in its large subscription base, potential rivals in this fields are unable to compete for movie viewing rights, meaning a lack of competition.
It was also claimed by the Commission, that while it was aware of ‘significant developments’ within the market, it had not seen any evidence that Sky’s stranglehold on movie pay-per-view market would diminish its bidding advantage.
The Commission is now inviting responses to its provision findings.
Laura Carstensen, Chairman of the Movies on pay TV market investigation said: “Sky has had control of recent movie content on pay TV for many years. 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.
“Recent movie content is important to many pay-TV subscribers. As a result, Sky's control of this content on pay TV enables it to attract more pay-TV subscribers than its rivals and having more subscribers increases further its advantages when bidding in the next round for pay-TV movie rights, and so it goes on.
“We have found that, as a result of this lack of effective competition, subscribers to Sky Movies are paying more than they otherwise would, and there is less innovation and choice than we would expect in a market with more effective competition.
“We have considered carefully how technology is changing the options available to consumers and the ways in which many firms are now seeking to offer consumers Internet-distributed movie services. We have observed several significant developments taking place in the market at the moment. However, we have found no evidence to date that any of these alternative providers of movie products are likely to affect significantly Sky's ability to secure the first pay-window rights of the major studios in the foreseeable future-though we will continue to monitor developments in this area through to our final report, which we expect to publish early next year.
“On the basis of our findings, we would like to encourage greater competition by enabling more firms to secure the pay-TV rights of the major studios so as to be able to offer movie fans new choices in competition with Sky's movie offerings. We are consulting today on the kinds of remedies which we might pursue.”
Remedies include the possible restriction of the number of movie studios that license Sky to offer pay-per-view rights, restricting the license rights of Sky to offer subscription video on demand to other providers or require Sky to acquire movie rights on a wholesale basis and offer any movie channel created by a rival.
BSkyB has issued a statement acknowledging the findings of the Commission.
“BSkyB 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,” the statement added.