BSkyB will be ordered to weaken its stranglehold on Hollywood films on pay-TV after an investigation by the Competition Commission.
In a provisional decision published on Friday morning, the commission said BSkyB's contracts with the six major Hollywood studios present a significant barrier to entry to potential competitors, including BT and Virgin Media. The industry watchdog ruled that the prices charged by Sky to Virgin are too high, meaning Virgin cannot make a business selling films to its customers.
Among a number of recommendations from the commission, the regulator said Sky should be restricted from signing exclusivity deals with all of the major Hollywood film studios for movie rights in the so-called "first subscription pay television window".
The Competition Commission recommended that exclusivity deals with the film giants should be weakened so rival operators can buy the rights to other distribution methods, including video on demand.
Under recommendations put forward by the Competition Commission, BT and Virgin Media would be able to rival Sky Movies by offering their own selection of new releases.
The Virgin Media 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. We're pleased that the Competition Commission has provisionally recognised that consumers have suffered significant harm from Sky's stranglehold and are paying far too much to watch films at home.
"We hope today's findings will lead to a dramatic transformation of the market and allow new compelling services to flourish that give consumers much greater choice of innovative film services. We look forward to working with the commission to ensure that movie fans reap the benefits of a more competitive and dynamic market."
The Competition Commission will invite views on its recommendation before publishing a final decision in August 2012.
August 19, 2011
Competition Commission recommends pay-TV movie changes
Could the price of Sky Movies be coming down? There are two stings in the tail of the following report from MediaGuardian: the final report from the Competitions Commission isn't due for another year, and when we last had this kind of breakup on Sky's market dominance (with Premiership football) the consumer ended up worse off, having to be pay for ESPN without Sky's prices dropping. We'll have to see.