Competition Commission drops action against Sky Movies

After an investigation into the competition of the pay-TV movie market in the UK, the Competition Commission (CC) revealed today that it is no longer concerned that British Sky Broadcasting's (BSkyB's) 'Sky Movies' has an unfair advantage over its competitors.

"The CC finds that Sky Movies no longer provides Sky with a material advantage over its rivals in the pay-TV retail market," the regulator announced on Wednesday morning.

Its revised provisional findings showed that customers now have alternatives to using Sky to way paid-for movies at home, including internet-based services Netflix and LOVEFiLM. In the past, people wanting to watch recent films on a pay-TV movie service had to subscribe to Sky Movies through a traditional pay-TV platform, the CC said.

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"The CC expects consumer choice to increase further when Sky launches its own Internet-based service in the summer (branded Now TV), which will offer Sky Movies without the need to take any other pay-TV content or subscribe to Sky's satellite platform."

Sky currently holds the rights to the movies of all six major Hollywood studios in the first subscription pay-TV window (FSPTW), but LOVEFiLM and Netflix have both already bought the FSPTW rights of several other studios and rights to movies of many of the major studios in subsequent pay-TV windows.

"The CC has found that, as rival services increase the number of their subscribers, the barriers to them acquiring further FSPTW rights will continue to fall."

Laura Carstensen, the Chairman of the Movies on Pay TV market investigation, said: "Competition between providers of movie services on pay TV has changed materially and, as a result of these changes, consumers now have much greater choice. LOVEFiLM and Netflix offer services which are attractive to many consumers and they appear sufficiently well resourced to be in a position to improve the range and quality of their content further."

"Despite these developments, which are good for competition and good for consumers, we still believe that competition in the pay-TV retail market overall is ineffective," she said.

BSkyB notes in the findings in a press release this morning, reiterating that the CC no longer proposes any remedial action. "The CC will now consult on its revised provisional findings. BSkyB will continue to engage with the CC during the final stage of its investigation," the company said.

BC