Competition Probe Over Sky's Pay-TV Movies

BSkyB is facing a probe by the Competition Commission over concerns raised about the sale and distribution of subscription premium Pay TV movies.
Medis regulator Ofcom had been investigating the distribution of first-run Hollywood movies, specifically the rights to movies sold by the major Hollywood studios to broadcast films for the first time on Pay TV and the wholesale supply of Pay TV packages containing movies channels, which are based on those rights.
Ofcom's investigation raised concerns that Sky's distribution of the films may reduce competition.
A statement released by the regulator said: "First-run Hollywood movies are particularly important to competition in the Pay TV sector. This is because they are highly attractive to a large number of consumers, who want subscription access to premium high quality movies as close to their box office release as possible. This content is a key factor for many consumers when signing up to a Pay TV service.
"Ofcom is concerned in particular that the way in which these movies are sold and distributed creates a situation in which Sky has the incentive and ability to distort competition. The end result for consumers is less choice, less innovation and higher prices."
The investigation was launched in March 2007 after Ofcom received a submission from BT, Setanta, Top Up TV and Virgin Media and the Competition Commission will have two years to complete its investigation.
Tony Ballard, a partner at media and entertainment law firm Harbottle & Lewis, said: "Ofcom has said that under the current regulations one player will be enabled and incentivised to charge higher prices because of its market power. So, if the Competition Commission does its stuff it will mean lower prices."
(KMcA/BMcC)