U.K. Shoots Down Sky’s Control Over Pay TV Movie Market

The U.K.’s Competition Commission has announced that it has provisionally found that British Sky Broadcasting’s control over the pay TV movie market is restricting competition among rivals, leading to higher prices and fewer choices for consumers.

The investigation, which the Commission began in August 2010, followed a three-year study of the pay TV market by the U.K.’s communications regulator, Ofcom.

According to the Commission’s findings, Sky has held the exclusive rights to distribute first releases of movies on pay TV from the six largest Hollywood studios for the past 20 years.  The lead investigator for the Commission noted that Sky’s position as the largest provider of pay TV in the U.K. has allowed it to continually outbid its rivals for these rights. 

The Commission found that Sky’s exercise of these rights and its market dominance cost consumers £50-£60 million ($80-$95 million) a year more than they otherwise would have paid in a more competitive market.  The Commission also found that while Sky provided first releases of movies to one of its competitors, Virgin Media, to distribute, it did so at unfavorable rates.

The Commission has proposed three possible remedies for which it seeks comment: (1) restricting the number of studios granting exclusive rights to Sky; (2) restricting the nature of those rights (such as by allowing for competitors to have concurrent distribution rights through other means); and/or (3) requiring Sky to purchase and offer to its subscribers movie channels created by its rivals.

The Commission’s final report is due August 3, 2012.