MUMBAI: The Competition Commission (CC) in the UK has provisionally found that UK pay TV service provider Sky’s control over pay-TV movie rights in the UK is restricting competition between pay-TV providers, leading to higher prices and reduced choice and innovation for subscribers.
Sky has for many years held exclusively the rights to the movies of all six major Hollywood studios in the first subscription pay-TV window (FSPTW).
In a summary of its provisional findings published today, the CC has provisionally found that, due principally to the incumbency advantage Sky has in the form of its large base of subscribers, would-be rivals are unable to bid successfully against Sky for these rights. Although Sky supplies its movie channels (Sky Movies) to some other pay-TV retailers, the CC has provisionally found that this supply has not enabled these retailers to compete effectively with Sky for movie
channel subscribers.
Due to the importance of being able to see recent movies to many pay-TV subscribers, Sky’s control over the FSPTW movie rights of the major studios, and therefore over the movie channels incorporating this content, contributes to a lack of effective competition in the overall pay-TV retail market. Many consumers do not consider the other ways of watching movies as close substitutes to Sky Movies, which is
confirmed by the value attached to the FSPTW rights of the major studios by Sky and the studios.
Although the CC is aware of some significant developments taking place in the market, it has not seen evidence that these are likely to diminish Sky’s bidding advantages to any meaningful degree in the foreseeable future.
The CC has invited responses to its provisional findings and consulting on measures to make the market more competitive.
Chairman of the Movies on pay TV market investigation Laura Carstensen said, “Sky has had control of recent movie content on pay TV for many years. At the heart of the problem is Sky’s strong position in the pay-TV market, with twice as many subscribers to pay TV as all other traditional pay-TV retailers put together. This provides Sky with a great advantage when it comes to bidding for movie rights, which no rival bidder has yet been able to overcome—and, if things stay as they are, we see no likely prospect of change. 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."
As a result of this lack of effective competition, subscribers to Sky Movies are paying more than they otherwise would.
“On the basis of our findings, we would like to encourage greater competition by enabling more firms to secure the pay-TV rights of the major studios so as to be able to offer movie fans new choices in competition with Sky’s movie offerings. We are consulting today on the kinds of remedies which we might pursue,"Carstensen said.
The principal possible remedies on which the CC would like to invite views are:
1. restricting the number of major studios from which Sky may license exclusive FSPTW rights;
2. restricting the nature of the exclusive FSPTW rights which Sky can license from the major studios (eg so that rights for distribution methods such as subscription video on demand could be made available to other providers); and/or
3. ‘must retail’ measures requiring Sky to acquire on a wholesale basis and offer to its subscribers any movie channel containing FSPTW movie content created by a rival.
The CC expects to publish the full provisional findings report next week. The CC would like to hear from all interested parties in response to its Notice of Possible Remedies by 9 September and in response to its provisional findings by 16 September.
