08.29 Europe/London, August 19, 2011 By Julian Clover

BSkyB may face a limit on the number of exclusive movie rights it is allowed to hold from the major Hollywood studios. It follows provisional findings by the Competition Commission that found Sky’s control over pay-TV movie rights in the UK is restricting competition between pay-TV providers, leading to higher prices and reduced choice and innovation for subscribers.

In other proposals being put out to consultation by the Commission the nature of exclusive rights might also be restricted, so that rights for distribution rights to subscription on demand could be made available to other providers.

Sky could also face “must retail” measures requiring it to acquire on a wholesale basis and offer to its subscribers any movie channel containing first subscription pay-TV window (FSPTW) movie content. The remedy is similar to that already imposed on Sky following the earlier pay-TV review by the regulator Ofcom.

The Commission puts down Sky’s hold on the pay-TV market to the incumbency advantage Sky has in its 10 million subscribers, meaning that would-be rivals are unable to bid against it effectively. It says although Sky offers its movie channels to other pay-TV providers they have been unable to compete effectively.

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”.

Sky responded by listing some of the many innovations that have been introduced over the years, including its Push and Pull VOD services; Sky Anytime and Sky Anytime+ and the recent multiscreen offer Sky Go. “Sky’s movie channels have undergone multiple “reorganisations” over time, as Sky has striven to produce channels that most appeal to subscribers, and make it easy for them to find movies they want to watch.”

The satcaster said the market was already changing with major retailers including Amazon, Tesco, Apple and Netflix all becoming involved in the UK. “During periods of significant change it is particularly important for regulators and competition authorities to act with an even greater degree of forbearance than is otherwise appropriate.”

Commenting on the findings, Virgin Media said the ruling was a good result for anyone who likes film. “Virgin Media has long argued that there are deep rooted problems in the Pay TV movies market which have been severely hampering competition,” said CEO Neil Berkett. “We’re pleased that the Competition Commission has provisionally recognised that consumers have suffered significant harm from Sky’s stranglehold and are paying far too much to watch films at home.”

Responses to its remedies are being sought by the Commission by September 9, 2011 and a response to its provisional findings by 16 September 2011.