BSkyB rapped over movies

The UK’s Competition Commission has ordered the country’s main satcaster BSkyB to stop monopolising the pay-TV movie market.

Sky currently has a £280m-(US$460m)-a-year deal with all six major Hollywood studios to air their new movie releases on its Movies and Box Office channels exclusively for up to 15 months following their release.

However, in a preliminary ruling published today the Commission said this unfairly prevents rivals such as Virgin Media and BT from competing.

Laura Carstensen, chairman of the Competition Commission’s movies on pay-TV investigation, said Sky’s dominant position in the market was at the heart of the problem.

“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,” she said.

“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.”

The Commission also found that the prices Sky charges Virgin to show the films on the latter’s own platform prevent it from creating a profitable business model with them.

In a statement, BSkyB responded by saying that intervention by the Competition Commission was not in viewers’ best interests.

A spokesman said: “BSkyB continues to believe that no regulatory intervention is required and that consumers benefit from high levels of choice, value and innovation across a wide range of providers.

“We note that the findings remain provisional and have been issued for consultation. We will continue to engage with the commission during the on-going regulatory process.”

The news is the latest blow in a troubled summer for the satcaster. Earlier, a proposed takeover of BSkyB by its majority shareholder News Corp was referred to the Commission and then dropped under a mountain of political pressure as the phone-hacking row escalated in the UK.