Sky Pay-TV Films 'Restrict Competition'

The Competition Commission has provisionally ruled that Sky's control over pay-TV movie rights in the UK is restricting competition.

Sky has held exclusive rights to the movies of six major Hollywood studios for many years and the Competition Commission said that Sky's large number of subscribers limited potential competitors from bidding for these rights.

The Competition Commission said that they will continue to consult on measures to make the market more competitive, before publishing a final decision in August 2012.

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."

Carstensen said: "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 kids of remedies which we might pursue."

(KMcA/BMcC)