February 08, 2011

Sky Movies profits criticised by Competition Commission

According to the front page of the FT today:
"The Competition Commission has reported that BSB is making “excess profits” on its Sky Movies service, prompting analysts to say that the broadcaster will be forced to cut its margins.
BSkyB’s exclusive deal with the six big Hollywood studios will come under scrutiny, as will the wholesale price that the company charges other broadcasters to show its 10 film channels."
Sky of course had a similar finding regarding the charges it made to Virgin Media for Sky Sports, but did we see the price we pay drop? No we didn't. Whilst it will be interesting to see how this pans out (and it probably has months to go yet) I wouldn't hold your breath waiting for discounts.


sibod said...

Essentially Sky are being rewarded for taking early risks in the market by being the biggest gorilla in the zoo.

In the current environment, one either has to be a similarly sized media corporation (Viacom, Disney ABC, etc) to come in with enough capitol to buy the rights for a higher price than Sky.

The only other way is to buy it wholesale from Sky in the form of Sky Movies, which is the only option for the majority.

So the likes of Love Film, who dont operate linear channels, simply have no option but to scrabble around for the meagre pickings left behind.

Sky have become too powerful, and are soaking up all the Pay TV rights to virtually everything these days, virtually unchallenged.

Witness their comments about Sky Atlantic being a 'fair price' and virgin wanting it 'on the cheap'.

baw said...

Was there not also the question of them also buying rights to things like HD VOD that they couldn't physically show to the end user?

Simply to stop Virgin and others from offering an alternative.

How can that be in the best intersets of the consumer?