By Jason Theodorou

UK regulator Ofcom has referred the market for Pay TV movies to the Competition Commission, raising concerns that satellite broadcaster BSkyB has come to dominate the market through its premium Pay TV services.

Ofcom said that there were 'reasonable grounds' to believe that Sky distribution of major Hollywood films restricted competition, and this has seen the regulator refer the studio sales of film rights to subscription channels to the Competition Commission as part of a three year investigation.

The regulator voiced concerns that the process by which films are distributed and sold has created an opportunity for Sky to distort competition. Ofcom said that the result for the consumer was 'less choice and higher prices'.

Ofcom said in a statement: 'We are concerned that Sky will maintain and exploit its market power by restricting the distribution of its movies channels and exploitation of subscription video on demand".

Sky may be forced to cut film prices for competitors including BT and Virgin if the complaint is upheld by the Competition Commission. At least half of Sky's 9.8 million customers subscribe to movie channels, which Ofcom has recognised as a 'key factor' for most consumers when choosing a pay TV package.

Last week BSkyB reported an increase in annual profits, driven by new subscriptions. Pre-tax profits for the year to the end of June arrived at £878 million. The broadcaster has also announced a wide-ranging deal with HBO.


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