By Marcus Leach

The Competition Commission (CC) has provisionally found that 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.

Sky has for many years held exclusively the rights to the movies of all six major Hollywood studios in the first subscription pay-TV window (FSPTW).

In a summary of its provisional findings published today, the CC has provisionally found that, due principally to 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.

Although Sky supplies its movie channels (Sky Movies) to some other pay-TV retailers, the CC has provisionally found that this supply has not enabled these retailers to compete effectively with Sky for movie channel subscribers.

Due to the importance of being able to see recent movies to many pay-TV subscribers, Sky’s control over the FSPTW movie rights of the major studios, and therefore over the movie channels incorporating this content, contributes to a lack of effective competition in the overall pay-TV retail market.

Many consumers do not consider the other ways of watching movies as close substitutes to Sky Movies, which is confirmed by the value attached to the FSPTW rights of the major studios by Sky and the studios.

Although the CC is aware of some significant developments taking place in the market, it has not seen evidence that these are likely to diminish Sky’s bidding advantages to any mean- ingful degree in the foreseeable future.

The CC is today inviting responses to its provisional findings and consulting on measures to make the market more competitive.

"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," Laura Carstensen, Chairperson of the Movies on pay TV market investigation said:

"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."

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