Competition Commission finds lack of competition in UK Pay-TV movie market
The current woes for Sky and the Murdochs started by the News of the World phone hacking scandal are going from bad to worse. For today the Competition Commission has provisionally found that Sky’s control over Pay-TV movie rights in the UK is restricting competition between pay-TV providers, resulting in ‘higher prices and reduced choice and innovation for subscribers’.
The innovation bit of this provisional finding must come as a particular blow to Sky, which prides itself on advancing broadcasting technology.
The report notes that Sky has exclusively held the rights for many years to the movies of all six major Hollywood studios in the ‘first subscription pay-TV window’, and that because of ‘the incumbency advantage Sky has in the form of its large base of subscribers, would-be rivals are unable to bid successfully against Sky for these rights’.
Sky does, of course, provide its movie channels to some other pay-TV retailers. But the CC has again provisionally found that this supply ‘has not enabled these retailers to compete effectively with Sky for movie channel subscribers’.
So what’s the CC’s solution to this perceived ‘problem’? There are three main tenets to it. First, it’s considering restricting the number of major studios from which Sky may license exclusive first show rights.
Second, it’s considering restricting the nature of the exclusive first show rights which Sky can license from the studios. And finally it’s considering ‘must retail’ measures requiring Sky to acquire on a wholesale basis and offer to its subscribers any movie channel containing first-show material created by a rival.
Needless to say, Sky hasn’t taken to this preliminary report particularly well. Ian Lewis, Director, Sky Movies, has responded by saying that ‘as both the person in charge of Sky Movies and, just as importantly, a major film fan’, he sees the current situation very differently to the CC. He cites the wealth of other film sources available to end users now – the Xbox, iMovies, BT Vision, the PS3 etc – as well as pointing to Sky’s innovations in the film area, particularly introducing HD and 3D to the UK marketplace.
He further suggests that it’s actually Sky’s ability to show films to their best advantage that persuades film studios to give Sky the rights to their movies more than money. And he adds, too, that Sky is not gifted any rights, and that all of its output deals are secured through ‘fair and open processes’, whereby any of their competitors could outbid sky for those rights should they choose to – or make their case to the studios for selling their rights differently.
The CC is inviting submission on its provisional findings, though it seems unlikely that the main thrust of what they’re suggesting will be changed substantially by the time the final report is published next week. Quite what this will ultimately mean for the world of pay per view movies is anyone’s guess.