Sky Faces Probe Over Premium Pay-TV Movie Rights

Jonathan Sutton

Ofcom, the broadcast media regulator in the United Kingdom, has once again referred British Sky Broadcasting (BSkyB) to the Competition Commission, on this occasion for Sky’s dominance in the premium pay-TV movie subscription arena, which Ofcom fears may suppress competition and diminish choice and innovation to the detriment of the consumers at large.

According to a statement released today, one of the key issues that Ofcom has asked the competition regulators to investigate is Sky’s exclusive subscription video on-demand (SVoD) deals with six major Hollywood studios (Fox, NBC Universal, Sony, Time Warner, Viacom and Walt Disney), which gives Sky the right of first refusal to show the latest movie titles to its customers.

Convinced that first-run Hollywood films play a significant role in driving subscription to premium movie channels as viewers crave to watch blockbusters as close as possible to their cinema release, Ofcom expressed concerns that Sky could abuse its existing position as market leader to negotiate lucrative and exclusive deals with the movie studios, thereby effectively killing off competition and driving up prices if no regulator intervened.

Ofcom also requested that the Competition Commission look into BSkyB’s wholesale supply of premium movie pay-TV packages to rival broadcasters such as Virgin Media.

BSkyB must be incensed by Ofcom’s unending meddling in its TV subscription business. In a ruling in March earlier this year, the media regulator forced BSkyB to cut the price at which it wholesales some of its premium sports channels (namely Sky Sports 1 and Sky Sports 2) to competitors by more than 20%. Since then Virgin Media, BT Vision and Top Up TV have launched various TV packages offering these sports channels, some at attractive prices which undercut Sky’s own.

Criticising Ofcom’s latest attack, a Sky spokesman said that the investigation was unnecessary, and might deter Sky from investing in the development of new content, which means that in the end it is the customers who will suffer.

The Competition Commission has up to 2 years to investigate the concerns raised by Ofcom, and reach a concluding decision.

Source: Ofcom