The Competition Commission has told Sky that it will have to share the premium movie prowess with its competitors.
BSkyB has contracts in place with six of the major Hollywood studios that see it getting first dibs on most Hollywood blockbusters, giving the premium Sky Movies channels exclusivity on the big hitters for up to 15 months.
The Commission has ruled that Sky charges other pay TV competitors like BT Vision and Virgin Media too much for these movies, meaning that they're unable to sustain a business selling films.
Article continues below
Not to mention the fact that Sky's domination of film broadcast rights means that we consumers are paying £50- to £60 million more a year than we should.
Recommendations from the Competition Commission, a final decision on which will be published in August 2012, include Sky being restricted from signing exclusivity deals with all studios.
It has also been suggested that the deals themselves be changed, so that other operators can buy the rights to, for example, on demand showings of the films while another operator owns the broadcast rights.
Laura Carstensen, chairman of the Competition Commission's investigation, said: "Recent movie content is important to many pay-TV subscribers. As a result, Sky's control of this content on pay TV enables it to attract more pay-TV subscribers than its rivals and having more subscribers increases further its advantages when bidding in the next round for pay-TV movie rights, and so it goes on.
"We have found that, as a result of this lack of effective competition, subscribers to Sky Movies are paying more than they otherwise would, and there is less innovation and choice than we would expect in a market with more effective competition."
Agree to disagree
Virgin Media's chief executive, Neil Berkett, said "Virgin Media has long argued that there are deep rooted problems in the pay-TV movies market which have been severely hampering competition."
Unsurprisingly, Ian Lewis, director of Sky Movies, disagrees: "As both the person in charge of Sky Movies, and, just as importantly, a major film fan myself, I see a very different picture to that outlined by the CC.
"And, not to put too fine a point on it, I struggle to understand how anyone can think the supply of movies today is anything other than vibrant and dynamic."
"While we continue to engage the CC on its ongoing investigation, it's worth taking the time to consider whether regulatory intervention is really something that is required in this rapidly evolving marketplace."
From The Guardian